Sopharma 2013 sales grow 11% on rising distribution and retail business; net profit down 12.3% on sale and revaluation of investment in Doverie United Holding (NEUTRAL)

Q4’13 consolidated sales increased 15% YoY to BGN 210.8m as domestic sales grew 14.5% to BGN 144.9m and exports increased 16.1% to BGN 65.8m. The share of the distribution business increased to 64.6%, up from 59.6% in the comparable period. Total revenues increased 15.1% to BGN 214.1m. EBITDA increased by 33.6% to BGN 18.5m with margin at 8.6% from 7.4% in the comparable period. Net financial expenses more than doubled to BGN 9.3m mostly as a result of the revaluation of the stake in Doverie United Holding. Net income came to BGN 38k compared to BGN 793k net loss in Q4’12. 2013 sales increased 11% YoY to BGN 764.6m. Exports improved by 15% to BGN 247.5m due to the acquisition activity of the subsidiary Briz, which increased its pharmacies to 91 and almost doubled its revenue to €33m (BGN 65m). Domestic sales increased 9.2% to BGN 517m as the subsidiary Sopharma Trading registered 9.6% YoY improvement. Total revenues increased 11.2% to BGN 772.4m. EBITDA improved in line with sales by 11.7% YoY to BGN 79.5m due to the strengthening of the gross margin of the distribution segment to 9.1% compared to 5.2% in 2012. Below the EBITDA line, the BGN 4.6m loss on investments (mainly from the sale of stake in Doverie United Holding at lower price than its balance sheet value) coupled with the BGN 6.5m negative revaluation of the remaining stake resulted in 12.3% decline of net income to BGN 30.9m (EPS of BGN 0.24).