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Cost cuts lift Richter profit 6% in Q3

Hungarian drugmaker Richter Gedeon’s third-quarter after-tax profit climbed 5.9% to HUF 20.6bn from the same period a year earlier as spending on administrative costs and research and development was cut, the company’s consolidated IFRS report published Tuesday shows.

Profit was over the HUF 17.5bn estimate by analysts polled by

Earnings per share came to HUF 1,108, up from HUF 1,042 in the base period.

Third-quarter revenue fell 7.8% to HUF 73.4bn. Cost of sales declined at a slower rate, dropping 5.5% to HUF 25.5bn, causing gross margin to drop by 9.0% to HUF 46.8bn.

In spite of the declines, Richter’s operating profit was up 6.1% at HUF 25.5bn as the company slashed administrative and other operating costs by 30.2% to HUF 3.5bn and R+D spending was reduced by 8.0% to HUF 6.9bn.

In Q1-Q3, a big increase in administrative and other operating cost - mainly related to sales and marketing activities, Richter noted in the report - took a bite out of the bottom line.

After-tax profit fell 30.0% to HUF 40.4bn from the same period a year earlier.

Revenue edged up 1.2% to HUF 218.3bn. At the same time, cost of sales fell 3.1% to HUF 81.0bn, lifting gross margin by 3.9% to HUF 137.3bn.

The increases were countered, however, by a 32.6% increase in administrative and other operating costs to HUF 57.9bn. Richter also booked a HUF 3.6bn financial loss in Q1-Q3 compared to financial profit of HUF 6.8bn in the base period.

Richter said its domestic sales in Q1-Q3 rose 9.3% to HUF 28.1bn from the same period a year earlier. Sales in other European Union countries were up 10.2% at HUF 78.3bn, but sales in CIS countries edged down 1.4% to HUF 85.0bn and sales in the US plunged 37.4% to HUF 13.6bn. Sales in other countries were up 21.2% at HUF 13.3bn.

Capital expenditures came to HUF 17.5bn in Q1-Q3, up 36.1% from the base period. CAPEX in Hungary reached HUF 3.2bn.

Richter had total assets of HUF 623.4bn on September 30, 2011, up 4.1% from the end of 2010. Net assets were up 4.8% at HUF 458.5bn.