Zentiva reported its H1 2004 IFRS results

Zentiva reported its consolidated H1 2004 IFRS results on Friday. Net profit rose by 33% y-o-y driven by (i) improved operating performance (sales rose by 8%), (ii) a declining financial burden due to a partial refinancing/repayment of Zentiva's debt, and (iii) a lower effective CIT rate (32.4% vs. 36.3% in H1 2003).

Pharmaceutical sales were driven by both a solid 10% growth on the Czech market and expansion in Poland and Russia (+148% and +58% respectively). On the other hand, sales in Slovakia fell by 9%, in line with the entire market following the drug-financing reform there at the end on 2003. Given Zentiva's focus on promoting high-margin brands, restructuring its product portfolio in Slovakia, and an increased internal use of self-produced APIs, gross margin has improved to almost 64% from 57% a year ago. This has however been offset by higher marketing and administrative costs associated mostly with the penetration of the Polish and Russian markets, and the EBIT margin was thus flat at 25%.

The company expects its sales to grow in line with the market in the CR and Slovakia in H2 2004, while outperforming the Russian and Polish market. Also, margins are expected to decline in H2 due to the seasonality in the production structure. Also, capex is planned at 7% of sales in FY2004, up from 5.5% in H1.

Jan Hajek Jan Hájek