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Egis stands by revenue target based on H1 results

László Marosffy, deputy-CEO of Hungarian drug maker Egis, confirmed the company's revenue target for the full 2009/2010 business year based on first-half results.

Egis targets revenue growth of 5% on the domestic market in its business year started October 1. It puts growth on the Russian market between 5% and 10%, calculated in US dollars. Growth in the other CIS countries is seen reaching 8%-10%. The growth target in Eastern Europe, calculated in euros, is 8%.

Exports of finished products and active ingredients to the West are expected to fall 35%. The company hopes the drop in exports to markets in the West will bottom out in 2010 and stagnate or rise slightly in the coming years.

Egis's management targets annual growth on the domestic market of 5% in 2011-2013. Annual growth in Russia and the CIS is set to reach 1% or more, while growth in Eastern Europe will be about the same during the period.

Egis's first-half consolidate revenue fell 7.0% to HUF 56.1 billion from the same period a year earlier, the company said on Tuesday. Domestic sales rose 1.5% to HUF 15.73 billion, but export sales fell 9.9% to HUF 40.38 billion.

Second-quarter net profit fell 21% to HUF 4.73 billion as revenue fell faster than costs. Revenue fell 8.0% to HUF 28.71 billion. Costs of sales fell just 5.2% to HUF 13.15 billion, causing gross profit to drop 10.3% to HUF 15.56 billion.

Marosffy attributed the drop in profit to the fall in revenue caused by lower turnover in regions that the company does not consider strategic markets. The dollar's exchange rate during the period was also a disadvantage, he added.

Exchange rate changes will always have an effect on the company as exports account for 70% of Egis's revenue, but this effect is moderated by hedging deals, he said.

Egis's turnover on Eastern European markets grew, and it improved its competitiveness on other strategic markets, such as Hungary and CIS countries, Marosffy said. The big drop in exports to western markets was in line with the target, he added.

Egis introduced four new products on the domestic market in the first half of its business year and it is preparing to introduce another two. Introducing new products is the only source of growth for the company in Hungary, Marosffy said.

Capital expenditures came to HUF 4.6 billion in the first half and they are expected to reach HUF 12 billion - HUF 13 billion by the end of the business year. (MTI – Econews)