Richter Earnings Fall as Windfall Profit Tax Weighs
Image by LaMography/Moni Lazar
Q2 net income of Hungarian pharmaceutical company Gedeon Richter fell 62% year-on-year to HUF 28.7 bln, dragged lower by a financial loss and a windfall profit tax, an earnings report published ahead of the opening bell on Friday shows.
Revenue rose 6% to HUF 203.8 bln. Direct cost of sales fell 10pc to HUF 74.8 bln, lifting gross profit by 17% to HUF 128.9 bln.
Richter booked HUF 16.7 bln on the "other expenses" line, up from HUF 5.2 bln in the base period.
It had a net financial loss of HUF 7.7 bln, compared to a net financial gain of HUF 28.7 bln in Q2 2022.
H1 Earnings Fall 40%
Richter's first-half net income dropped 40% to HUF 67.9 bln.
Earnings per share came to HUF 365 for the period.
Revenue climbed 15% to HUF 413.4 bln, but operating profit increased a more modest 6% to HUF 95 bln. Richter noted that it booked HUF 12.5 bln on an extraordinary sectoral tax for H1.
Richter had a net financial loss of HUF 24.9 bln, nearly all of it unrealized, compared to a net financial gain of HUF 30 bln in the base period.
The United States was Richter's biggest market in H1: pharma sales there climbed 36% to HUF 95.9 bln, lifted by an HUF 84 bln royalty for Vraylar, the brand name of Richter's antipsychotic cariprazine.
Pharma sales in Russia increased 24% to HUF 63 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 future.
Pharma sales in Hungary rose 16% to HUF 26.3 bln.
Richter noted that a procedure implementing the suspension of a number of products it sells in Ukraine was initiated in October, after legislation was amended to allow the revocation of licenses for companies that operate manufacturing units and pay taxes in Russia. The practical implementation of the measure did not take place by the end of H1 and sales of Richter's registered products have continued without impediment, so far, the company added.
Cariprazine, also marketed under the brand name Reagila, was Richter's top-selling product in H1: sales increased 47% to HUF 89.4 bln. Oral contraceptives were the runner-up, with sales climbing 21% to HUF 71.3 bln.
Richter CEO Gábor Orbán said revenue and net profit could grow 15-20% this year, in forints and cleared of the effect of exchange rate changes, speaking at a press conference after the earnings report was published.
Richter had issued guidance for 10% revenue and profit growth three months earlier.
Orbán said the guidance was raised because of the better-than-expected performance of Vraylar.
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