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Sales of Olainfarm in Nine Months Reach 90.4 Million Euros

on November 30, 2017

Unaudited Consolidated Income Statement of JSC Olainfarm for nine months of 2017 shows that during this period the Group made net sales of 90.4 million euros and in terms of sales these have been the best nine months in corporate history. Sales have increased by 15% compared to nine months of 2016. Net profit of the company in nine months was 6.6 million euros, which represents a reduction by 15% compared to 2016. Major sales markets of JSC Olainfarm during this period were Russia, Latvia, Belarus and Ukraine.

JSC Olainfarm just had its best third quarter in terms of sales, as company’s sales reached 27.7 million euros, representing an increase by 10%. During this quarter, the company made a net profit of 0.9 million euros, which represents a reduction by 46% compared to third quarter of 2016. Profit was significantly adversely impacted by forex loss of 0.5 million euros as well as provisions for assets deriving from acquisitions of Klīnika Diamed, NPK Biotest and Kiwi Cosmetics.

„This is the year when we are investing considerably in integration of our daughter companies into our group and into expansion of chain our representative offices. At the same time, the work at developing some products that are new to the company has also been rather intensive, with particular emphasis on several anticancer and antituberculosis preparations. We expect that some first of them might be commercialized in two years from now,” says Valerijs Maligins, Chairman of Board of JSC Olainfarm.

In nine months of 2017, sales to all key markets of JSC Olainfarm continued growing, except Ukraine, where sales shrunk by 40% compared to nine months of 2016. Reduction of sales to Ukraine was mainly caused by deteriorating economic situation in Ukraine and falling purchasing power, but also by the fact that some antituberculosis products that previously were sold to Ukraine directly, this year were sold to Ukraine via World Health Organization. The biggest sales increases were achieved in Germany (by 200%) and The Netherlands (by 133%). In total in nine months of 2017 products of Olainfarm were sold to 48 countries in five continents.

During the reporting period, registration processes were completed in Armenia and Azerbaijan. Registration processed have been started in Nepal and continued in Turkey, Armenia, Myanmar, Cameroon and Vietnam. Registration of medicines produced by NPK Biotest continue in Belarus. Parent company itself has submitted one more dossier in Turkey and is soon expected to launch several painkilling and anti-inflammatory medicines. Registration of new product Jogurt Actio has started in several markets.

Annual meeting of shareholders of JSC Olainfarm convened on June 1, 2017 approved operating plan of the Group for 2017. According to it, sales of the Group in 2017 are planned to be 127 million euros, but the net profit will reach 15.5 million euros. According to this unaudited report for nine months of 2017, during this period 71% of annual sales target and 43% of annual profit target is met. Taking into account a considerable deviation in schedule to achieving the profit target after the second quarter, the Board decided in September to review profit guidances downwards, setting them at 13.5 million for consolidated profit and 11 million for standalone profit.

Because of worse than expected profitability during the third quarter, the Board has again reviewed the profit guidances downwards, setting it at 9 million euros for consolidated and standalone profit, with a possibility of increasing it to 10 million if the reversion of deferred tax acquired as a result of business combination will be recognized.

Condensed Consolidated Statement of Financial Position Group
30.09.2017 31.12.2016
EUR ‘000 EUR ‘000
     ASSETS
NON-CURRENT ASSETS
Intangible assets 36 914 31 860
Property, plant and equipment 42 771 40 943
Investment properties 2 209 1 963
Financial assets 2 775 6 514
TOTAL NON-CURRENT ASSETS 84 669 81 280
CURRENT ASSETS
Inventories 24 367 24 011
Receivables 35 354 36 124
Cash 4 057 3 165
TOTAL CURRENT ASSETS 63 778 63 300
TOTAL ASSETS 148 447 144 580
EQUITY AND LIABILITIES
EQUITY
Share capital 19 719 19 719
Share premium 2 504 2 504
Reserves 40 322
Retained earnings 71 656 74 081
Non-controlling interests 38 37
TOTAL EQUITY 93 957 96 663
LIABILITIES
Non-current liabilities
Borrowings 19 829 18 800
Deferred corporate income tax 3 231 3 025
Deferred income 2 466 2 810
Total Non-Current Liabilities 25 526 24 635
Current liabilities
Borrowings 9 208 7 020
Trade payables and other liabilities 19 274 15 769
Deferred income 482 493
Total Current Liabilities 28 964 23 282
TOTAL LIABILITIES 54 490 47 917
TOTAL EQUITY AND LIABILITIES 148 447 144 580
Consolidated statement of comprehensive income Group Group
Q3 2017 Q3 2016 M9 2017 M9 2016
EUR ‘000 EUR ‘000 EUR ‘000 EUR ‘000
Net revenue 27 665 25 158 90 384 78 675
Cost of goods sold (10 921) (9 685) (34 851) (30 005)
Gross Profit 16 744 15 473 55 533 48 670
Selling expense (8 377) (6 716) (27 008) (21 340)
Administrative expense (5 423) (4 529) (16 872) (13 579)
Other operating income 732 427 1 753 1 923
Other operating expense (1 862) (2 400) (3 460) (6 651)
Share of profit of an associate 10 (12) 70 27
Income from investments in subsidiaries
Financial income 59  55 215 1 354
Financial expense (573) (98) (1 913) (207)
Profit Before Tax 1 310 2 200 8 318 10 197
Corporate income tax (398) (536) (1 806) (2 631)
Deferred corporate income tax (17) (7) 86 207
PROFIT FOR THE REPORTING PERIOD 895 1 657 6 598 7 773
Other comprehensive income for the reporting period
Total comprehensive income for the reporting period 895 1 657 6 598 7 773
Total comprehensive income attributable to:
The equity holders of the Parent Company 896 1 653 6 597 7 764
Non-controlling interests (1) 4 1 9
Basic and diluted earnings per share, EUR 0.06 0.12 0.47 0.55

JSC Olainfarm is one of the biggest pharmaceutical companies in Latvia with more than 45 years of experience in production of medication and chemical and pharmaceutical products. A basic principle of company’s operations is to produce reliable and effective top quality products for Latvia and the rest of the world. Products made by the Group are being exported to more than 50 countries of the world, including the Baltics, Russia, other CIS, Europe, Asia, North America and Australia.

Information prepared by:
Salvis Lapins
JSC Olainfarm
Member of the Management Board
Rupnicu iela 5, Olaine, Latvia, LV 2114
Phone: +371 6 7013 717
Fax: +371 6 7013 777
E-mail: Salvis.Lapins@olainfarm.lv

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SigitaSales of Olainfarm in Nine Months Reach 90.4 Million Euros