We forecast SA Bucharest will report RON 6.0m net profit for 2Q08 (versus RON 8.6m in 2Q07 and a RON 5.7m loss in 1Q08) on 4 August 2008. We believe recent automation in production coupled with layoffs will help margins, just as in 1Q08. However, we expect general market environment to remain difficult, due to slowdown in the Romanian pharmaceutical market growth and faster than expected erosion of SA’s relatively old drug portfolio. We forecast slight positive market reaction, as we expect first half 2008 net profit could reach RON 11.7m, which would exceed our full year expectation. Despite ongoing public bid for mother company from , we still do not see much chances for a minority buyout, as we believe the Romanian subsidiary’s business model will most likely be conserved and high value added mother company products will continue to be sold via another fully owned legal entity.
RAS, figures are in RON m unless stated otherwise
sales |
66.6 |
45.3 |
49.0 |
8.2% |
-26.4% |
operating expenses |
47.7 |
38.9 |
41.2 |
6.0% |
-13.6% |
EBIT |
18.9 |
6.4 |
7.8 |
21.4% |
-58.7% |
Financial result |
-7.2 |
1.0 |
0.3 |
-69.3% |
-104.2% |
Pre-tax profit |
11.7 |
7.4 |
8.1 |
9.4% |
-30.8% |
Taxation |
3.2 |
1.7 |
2.1 |
25.7% |
-33.1% |
Net result |
8.6 |
5.7 |
6.0 |
4.7% |
-29.9% |
EBIT margin |
28.4% |
14.2% |
15.9% |
|
|
Source: SA, Securities estimates