Richter Earnings Slip on Flat Turnover, Financial Loss
Image by LaMography/Moni Lazar
Net income of Hungarian pharmaceutical company Gedeon Richter fell 6% to HUF 158.9 billion in 2023 as revenue stagnated and a financial loss weighed, an earnings report published ahead of the opening bell on Thursday shows.
Revenue came to HUF 805.2 bln, up just 0.3%.
Direct cost of sales fell 17.1% to HUF 283.8 bln, boosting gross profit 13.2% to HUF 521.3 bln. Operating profit climbed 23.3% to HUF 189.4 bln, but a HUF 24 bln financial loss, albeit HUF 12.1 bln of it unrealized, weighed on the bottom line. Richter had booked a HUF 6 bln financial gain in the base period.
Spending on research and development increased 4.3% to HUF 78.3 bln.
Earnings per share came to HUF 860.
U.S. Remains Biggest Market
The United States was Richter's biggest market in 2023: pharmaceutical sales there climbed 33.7% to HUF 216.8 bln, lifted by HUF 194.3 bln of royalties from Vraylar, the brand name of Richter's antipsychotic cariprazine.
Pharmaceutical sales in Russia fell 9.4% to HUF 116.9 bln. Richter noted that capital restrictions in Russia did not allow it to conclude hedging contracts for the ruble, impacting financial results, and flagged short-term volatility of financial income in the future.
Pharmaceutical sales in Hungary rose 14% to HUF 52.2 bln.
Richter noted that a procedure implementing the suspension of 53 of the products it sells in Ukraine was initiated in October 2022, after legislation was amended to allow the revocation of marketing authorizations for companies that operate manufacturing units and pay taxes in Russia. Ukrainian authorities warned Richter that if it maintained its Russian manufacturing base, marketing authorizations would be revoked for ten Richter brands sold in 29 formulations with effect from early 2025. Richter said it would initiate a legal challenge of the decision.
Guidance for "Low-to-Mid-Teens" Revenue Growth
In an investor presentation released with the earnings report, Richter said its pharmaceutical revenue climbed 21.6% to HUF 798 bln when cleared of FX effects, exceeding initial guidance. FX headwind was "substantial" due to the weakness of the ruble and the strengthening of the forint to most currencies, it added.
Richter booked HUF 28.3 bln in payments on a windfall profit tax on pharma companies.
In guidance for 2024, Richter put pharmaceutical revenue, at a constant exchange rate, at EUR 2.15 bln-2.25 bln, up from EUR 1.96 bln in 2023. It said pharma revenues would grow in the "low-to-mid-teens", in percent.
It projected operating profit, at a constant exchange rate and cleared of one-offs, at EUR 725 mln-750 mln, climbing from around EUR 616 mln in 2023.
Richter said research and development spending would increase by around EUR 30 mln in 2024.
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