Corporate | 3 August 2017 07:30

STADA Arzneimittel AG: STADA shows good operational development in first six months of 2017

DGAP-News: STADA Arzneimittel AG / Key word(s): Miscellaneous

03.08.2017 / 07:30
The issuer is solely responsible for the content of this announcement.

– Significant increase in Group sales (+10 percent), EBITDA (+10 percent) and net income (+10 percent)
– Strong growth and significant margin improvement in Generics – sales (+8 percent), EBITDA (+17 percent), EBITDA margin (+180 basis points)
– Significant growth in Branded Products – sales (+15 percent), EBITDA (+16 percent)
– Improvement in net debt to adjusted EBITDA ratio to 2.3

STADA Group Key Figures

	Q2/2017	Q2/2016	+/-	H1/2017	H1/2016	+/-
Group sales, reported	EUR 576.9 million	EUR 537.5 million	+7%	EUR 1,143.2 million	EUR 1,034.7 million	+10%
Group sales, adjusted	EUR 557.9 million	EUR 535.7 million	+4%	EUR 1,096.4 million	EUR 1,032.4 million	+6%
EBITDA, reported	EUR 112.4 million	EUR 115.5 million	-3%	EUR 220.9 million	EUR 200.7 million	+10%
EBITDA, adjusted	EUR 129.2 million	EUR 110.2 million	+17%	EUR 237.7 million	EUR 202.3 million	+18%
Net income, reported	EUR 41.1 million	EUR 52.4 million	-22%	EUR 90.3 million	EUR 82.0 million	+10%
Net income, adjusted	EUR 60.8 million	EUR 56.0 million	+9%	EUR 114.1 million	EUR 96.1 million	+19%
Earnings per share, reported	EUR 0.66	EUR 0.84	-21%	EUR 1.45	EUR 1.32	+10%
Earnings per share, adjusted	EUR 0.97	EUR 0.90	+8%	EUR 1.83	EUR 1.54	+19%

“STADA’s operational development in the first six months of 2017 was good. We achieved growth that was well into the double digits in the Belgian Generics segment and in the Russian Branded Products segment. In addition to the strong sales growth, we were also able to further increase profitability”, says STADA’s Chairman of the Executive Board Engelbert Coster Tjeenk Willink.

Group sales increased – driven by Generics and Branded Products
Reported Group sales increased by 7 percent to Euro 576.9 million in the second quarter of 2017 (Q2/2016: Euro 537.5 million). Group sales adjusted for currency and portfolio effects recorded an increase of 4 percent to Euro 557.9 million (Q2/2016: Euro 535.7 million). Reported Group sales in the first six months of 2017 increased by 10 percent to Euro 1,143.2 million (1-6/2016: Euro 1,034.7 million). Group sales adjusted for currency and portfolio effects grew by 6 percent to Euro 1,096.4 million (1-6/2016: Euro 1,032.4 million).

Reported key earnings figures impacted by special items as expected
Due in particular to consultancy services incurred in connection with the takeover process, as expected there were special items especially in the second quarter of 2017 in the amount of Euro 17.1 million before and Euro 12.3 million after taxes which affected development of key earnings figures in the first six months of 2017.

Double digit increase in adjusted EBITDA
Reported EBITDA decreased by 3 percent to Euro 112.4 million in the second quarter of 2017 (Q2/2016: Euro 115.5 million). Adjusted EBITDA was up 17 percent to Euro 129.2 million (Q2/2016: 110.2 million Euro). Reported EBITDA in the first six months of 2017 increased by 10 percent to Euro 220.9 million (1-6/2016: Euro 200.7 million). Adjusted EBITDA recorded growth of 18 percent to Euro 237.7 million (1-6/2016: Euro 202.3 million).

Growth in adjusted net income
Reported net income decreased by 22 percent to Euro 41.1 million in the second quarter of 2017 (Q2/2016: Euro 52.4 million). Adjusted net income recorded an increase of 9 percent to Euro 60.8 million (Q2/2016: Euro 56.0 million). There was a 10 percent increase in reported net income in the first six months of 2017 to Euro 90.3 million (1-6/2016: Euro 82.0 million). Adjusted net income recorded growth of 19 percent to Euro 114.1 million (1-6/2016: Euro 96.1 million).

Operating cash flow below corresponding prior-year figure
Cash flow from operating activities decreased to Euro 89.5 million in the first six months of 2017 (1-6/2016: Euro 113.0 million). Free cash flow increased to Euro 16.3 million (1-6/2016: Euro 15.0 million). Free cash flow adjusted for payments for significant investments or acquisitions and proceeds from significant disposals increased to Euro 42.8 million (1-6/2016: Euro 42.5 million).

Net debt to adjusted EBITDA ratio improved
As of June 30, 2017, net debt was at Euro 1,110.9 million (December 31, 2016: Euro 1,118.2 million). The net debt to adjusted EBITDA ratio in the first six months of 2017 improved to 2.3 with a linear extrapolation of the adjusted EBITDA of the reporting period on a full-year basis (1-6/2016: 3.0).

STADA Segment Key Figures Generics

	Q2/2017	Q2/2016	+/-	H1/2017	H1/2016	+/-
Sales, reported	EUR 348.5 million	EUR 319.9 million	+9%	EUR 674.4 million	EUR 627.2 million	+8%
Sales , adjusted	EUR 336.6 million	EUR 318.1 million	+6%	EUR 648.3 million	EUR 624.9 million	+4%
EBITDA, adjusted	EUR 81.3 million	EUR 66.0 million	+23%	EUR 150.7 million	EUR 129.6 million	+16%
Margin, adjusted	23.3%	20.6%		22.3%	20.7%

Sales development Generics
Reported sales in the Generics segment recorded an increase of 9 percent to Euro 348.5 million in the second quarter of 2017 (Q2/2016: Euro 319.9 million). Sales in the Generics segment adjusted for portfolio and currency effects increased by 6 percent to Euro 336.6 million (Q2/2016: Euro 318.1 million). In the first six months of 2017 , reported sales in the Generics segment were up by 8 percent to Euro 674.4 million (1-6/2016: Euro 627.2 million). Sales of the Generics segment adjusted for portfolio and currency effects grew by 4 percent to Euro 648.3 million (1-6/2016: Euro 624.9 million). This development was primarily attributable to the initial consolidation of the Serbian Velexfarm. Furthermore, segment sales increased in Belgium and Italy. Generics contributed 59.0 percent to Group sales (1-6/2016: 60.6 percent).

Country development Generics
Within the Generics segment, the eight largest countries according to sales developed as follows in the second quarter of 2017 and in the first six months of 2017 :

Sales generated with generics in Germany increased in the second quarter of 2017 by 1 percent to Euro 75.2 million (Q2/2016: Euro 74.6 million). In the first six months of 2017 , sales decreased by 3 percent to Euro 145.9 million (1-6/2016: Euro 150.5 million). This development was due to opposing factors. As a result of discount agreement tenders won, ALIUD PHARMA recorded positive sales development. In contrast, the high comparable basis of the corresponding period of the previous year following the fully expired discount agreements in December 2016 had a dampening effect on sales at STADApharm. However, the company recorded positive sales development outside of the discount agreement tenders.

Sales achieved with generics in Italy grew by 11 percent in the second quarter of 2017 to Euro 45.6 million despite strong competition (Q2/2016: Euro 41.3 million) and by 6 percent in the first six months of 2017 to Euro 84.8 million (1-6/2016: Euro 79.8 million).

In Belgium , sales achieved with generics in the second quarter of 2017 increased by 125 percent to Euro 31.3 million (Q2/2016: Euro 13.9 million) and by 37 percent in the first six months of 2017 to Euro 56.0 million (1-6/2016: Euro 40.8 million). This development primarily resulted from positive volume effects due to the takeover of the sales activities since January 2017.

Sales generated with generics in Spain were down in the second quarter of 2017 by 5 percent to Euro 24.6 million (Q2/2016: Euro 25.9 million). In the first six months of 2017 , sales of Euro 53.0 million were at approximately the level of the corresponding period of the previous year (1-6/2016: Euro 52.8 million).

In Russia , sales with generics, applying the exchange rates of the previous year, declined by 17 percent in the second quarter of 2017 and by 13 percent in the first six months of 2017 . This development was particularly due to lower volume effects. As a result of the very positive currency effect of the Russian ruble, however, sales in Euro in the second quarter of 2017 declined by 4 percent to Euro 27.8 million (Q2/2016: Euro 29.1 million). There was a 6 percent increase in the first six months of 2017 to Euro 52.3 million (1-6/2016: Euro 49.3 million).

In Serbia , sales with generics, applying the exchange rates of the previous year, increased by 32 percent in the second quarter of 2017 and by 72 percent in the first six months of 2017 . In Euro, as a result of a stable currency effect from the Serbian dinar, sales increased in the second quarter of 2017 by 32 percent to Euro 22.0 million (Q2/2016: Euro 16.6 million) and in the first six months of 2017 by 72 percent to Euro 44.0 million (1-6/2016: Euro 25.6 million). This development was primarily attributable to the initial consolidation of a Serbian wholesaler. In addition, this development resulted from the change to the previous distribution model in the Serbian generics market, in the course of which the Serbian STADA subsidiary will now be increasingly focused on direct sales rather than sales through a wholesaler.

In France , sales generated with generics, mainly due to continued strong price and discount competition, decreased in the second quarter of 2017 by 6 percent to Euro 20.3 million (Q2/2016: Euro 21.6 million) and by 4 percent in the first six months of 2017 to Euro 38.7 million (1-6/2016: Euro 40.4 million).

Despite continued high price pressure, sales generated with generics in Vietnam , applying the exchange rates of the previous year, increased by 9 percent in the second quarter of 2017 and by 7 percent in the first six months of 2017 . As a result of a stable currency effect from the Vietnamese dong, sales in Euro increased in the second quarter of 2017 by 10 percent to Euro 17.7 million (Q2/2016: Euro 16.1 million) and in the first six months of 2017 by 8 percent to Euro 35.1 million (1-6/2016: Euro 32.4 million). This development primarily resulted from tenders that were won in the hospital market.

EBITDA and margin development Generics
Adjusted EBITDA of Generics grew by 23 percent in the second quarter of 2017 to Euro 81.3 million (Q2/2016: Euro 66.0 million) and by 16 percent in the first six months of 2017 to Euro 150.7 million (1-6/2016: Euro 129.6 million). This development was based primarily on the improvement in the operating profit in Belgium as a result of the termination in December 2016 of a sales cooperation that had been in place until that date as well as the improvement in the operating profit in the German Generics segment. The adjusted EBITDA margin for Generics was 23.3 percent in the second quarter of 2017 (Q2/2016: 20.6 percent) and 22.3 percent in the first six months of 2017 (1-6/2016: 20.7 percent).

STADA Segment Key Figures Branded Products

	Q2/2017	Q2/2016	+/-	H1/2017	H1/2016	+/-
Sales, reported	EUR 228.4 million	EUR 217.5 million	+5%	EUR 468.8 million	EUR 407.3 million	+15%
Sales , adjusted	EUR 221.3 million	EUR 217.5 million	+2%	EUR 448.1 million	EUR 407.3 million	+10%
EBITDA, adjusted	EUR 64.4 million	EUR 60.4 million	+7%	EUR 121.4 million	EUR 108.6 million	+12%
Margin, adjusted	28.2%	27.8%		25.9%	26.7%

Sales development Branded Products
Reported sales of the Branded Products segment increased by 5 percent to Euro 228.4 million in the second quarter of 2017 (Q2/2016: Euro 217.5 million). Sales in the Branded Products segment adjusted for portfolio and currency effects recorded growth of 2 percent to Euro 221.3 million (Q2/2016: Euro 217.5 million). In the first six months of 2017 , reported sale s in the Branded Products segment were up by 15 percent to Euro 468.8 million (1-6/2016: Euro 407.3 million). Sales in the Branded Products segment adjusted for portfolio and currency effects increased by 10 percent to Euro 448.1 million (1-6/2016: Euro 407.3 million). This development was based in particular on the strong development of segment sales in Russia. The increased sales contribution from the Serbian subgroup also contributed here. Branded Products had a share of 41.0% of Group sales (1-6/2016: 39.4 percent).

Country development Branded Products
Within the Branded Products segment, development of the five largest countries according to sales in the second quarter of 2017 and in the first six months of 2017 was as follows:

Sales generated with branded products in Russia , applying the exchange rates of the previous year, increased by 14 percent in the second quarter of 2017 and by 48 percent in the first six months of 2017 . In light of a very positive currency effect from the Russian ruble, sales in Euro – primarily as a result of higher volume effects – increased in the second quarter of 2017 by 32 percent to Euro 55.6 million (Q2/2016: Euro 42.2 million) and in the first six months of 2017 by 80 percent to Euro 108.0 million (1-6/2016: Euro 60.2 million).

In Germany , sales achieved with branded products in the second quarter of 2017 decreased by 26 percent to Euro 28.5 million (Q2/2016: Euro 38.4 million) and by 9 percent in the first six months of 2017 to Euro 91.4 million (1-6/2016: Euro 100.2 million). In addition to a high comparable basis in the corresponding period of the previous year, this development resulted primarily from two effects. On the one hand, the Group made the conscious decision to reduce seasonal annual orders, which in previous years had been made in the first six months and had a correspondingly positive effect on sales. On the other hand, the upcoming relaunch of Ladival in 2018 had a dampening effect on sales.

In the United Kingdom , sales with branded products, applying the exchange rates of the previous year, rose by 3 percent in the second quarter of 2017 and by 8 percent in the first six months of 2017 . This development was particularly attributable to acquisitions, despite levels of stock in the supply chain in the fourth quarter of 2016 as well as a weak cough and cold season in the first six months of 2017. In light of a negative currency effect as a consequence of the referendum decision in favor of the United Kingdom leaving the European Union, sales in Euro in the second quarter of 2017 decreased by 6 percent to Euro 47.3 million (Q2/2016: Euro 50.2 million) and by 2 percent in the first six months of 2017 to Euro 82.1 million (1-6/2016: Euro 83.6 million).

Sales generated with branded products in Italy declined in the second quarter of 2017 by 2 percent to Euro 11.0 million (Q2/2016: Euro 11.3 million). In the first six months of 2017 , sales increased by 1 percent to Euro 21.6 million (1-6/2016: Euro 21.5 million).

Sales generated with branded products in Vietnam , applying the exchange rates of the previous year, increased by 11 percent in the second quarter of 2017 and by 9 percent in the first six months of 2017 . Due to a stable currency effect from the Vietnamese dong, sales in Euro showed growth in the second quarter of 2017 by 12 percent to Euro 9.7 million (Q2/2016: Euro 8.6 million) and in the first six months of 2017 by 10 percent to Euro 19.4 million (1-6/2016: Euro 17.5 million).

EBITDA and margin development Branded Products
Reported EBITDA for Branded Products increased by 7 percent to Euro 64.4 million in the second quarter of 2017 (Q2/2016: Euro 60.4 million) and by 12 percent to Euro 121.4 million in the first six months of 2017 (1-6/2016: Euro 108.6 million). This development was particularly attributable to strong sales development and positive translation effects in Russia. Other contributing factors included an increased earnings contribution in the Serbian subgroup due to the integration of a consumer health product portfolio acquired in the third quarter of 2016 and a resulting strengthened market position. The adjusted EBITDA margin for Branded Products was 28.2 percent in the second quarter of 2017 (Q2/2016: 27.8 percent) and 25.9 percent in the first six months of 2017 (1-6/2016: 26.7 percent).

STADA reconciliation – special items second quarter of 2017

in EUR million ¹	Second quarter of 2017 reported	Impair- ments/write- ups on fixed assets	Effects from purchase price allocations and acquisitions ²	Consultancy services in connection with the takeover process	Reversal of tax provisions	Second quarter of 2017 adjusted
Earnings before interest, taxes and amortization (EBITDA)	112.4	—	-0.2	17.1	—	129.2
Balance from depreciation/amortization and impairments/write-ups on intangible assets (including goodwill), property, plant and equipment and financial assets	48.4	-17.5	-4.4	—	—	26.4
Financial income and expenses	10.7	—	—	—	—	10.7
Income taxes	9.8	3.0	0.5	4.8	10.4	28.5
Result distributable to non-controlling shareholders	2.5	0.3	0.1	—	—	2.9
Result distributable to shareholders of STADA Arzneimittel AG (net income)	41.1	14.2	3.6	12.3	-10.4	60.8

1 As a result of the presentation in Euro million, deviations due to rounding may occur in the tables.
2 Relates to additional scheduled depreciation and other measurement effects due to purchase price allocations as well as significant product acquisitions taking financial year 2013 as basis.

STADA reconciliation – special items first six months of 2017

in EUR million ¹	First six months of 2017 reported	Impair- ments/write- ups on fixed assets	Effects from purchase price allocations and acquisitions ²	Consultancy services in connection with the takeover process	Reversal of tax provisions	First six months of 2017 adjusted
Earnings before interest, taxes and amortization (EBITDA)	220.9	—	-0.3	17.1	—	237.7
Balance from depreciation/amortization and impairments/write-ups on intangible assets (including goodwill), property, plant and equipment and financial assets	79.2	-18.2	-9.0	—	—	52.0
Financial income and expenses	21.5	—	—	—	—	21.5
Income taxes	24.9	3.3	1.2	4.8	10.4	44.6
Result distributable to non-controlling shareholders	5.0	0.3	0.2	—	—	5.5
Result distributable to shareholders of STADA Arzneimittel AG (net income)	90.3	14.6	7.3	12.3	-10.4	114.1

Note: As part of the preparation of the Consolidated Financial Statements of STADA Arzneimittel
AG, the most up-to-date planning information available was used for STADA Vietnam J.V. Co. Ltd. for April to June 2017 as a result of a lack of financial information.

Contact:
STADA Arzneimittel AG / Investor Relations / Leslie Iltgen / Stadastraße 2-18 / 61118 Bad Vilbel – Germany /
Phone: +49 (0) 6101 603-173 / Fax: +49 (0) 6101 603-215 / E-mail: leslie.iltgen@stada.de

Or visit us in the Internet at www.stada.com .

03.08.2017 Dissemination of a Corporate News, transmitted by DGAP – a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

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Language:	English
Company:	STADA Arzneimittel AG
	Stadastraße 2-18
	61118 Bad Vilbel
	Germany
Phone:	+49 (0)6101 603- 113
Fax:	+49 (0)6101 603- 506
E-mail:	communications@stada.de
Internet:	www.stada.de
ISIN:	DE0007251803, DE0007251845,
WKN:	725180, 725184,
Indices:	MDAX
Listed:	Regulated Market in Dusseldorf, Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Hamburg, Hanover, Munich, Stuttgart, Tradegate Exchange


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