Sopharma Q3’13 consolidated sales up 14.7% on rising distribution business; net profit drops 82.6% (NEGATIVE)

Q3’13 consolidated sales increased 14.7% YoY to BGN 183.2m as domestic sales grew 7% to BGN 124.9m and exports surged 35.4% to BGN 58.4m. The share of the distribution business came to 70%, up from 65.3% in the comparable period. Total revenues increased 15% to BGN 184.2m. Cost of materials increased by 19.9% YoY. Cost of hired services rose 36.3% YoY due to the 77.5% growth of advertising cost and the 143% increase of maintenance cost. Segment-wise, the gross margins of the distribution business soared in Q3’13 – 14.1% compared to 6.5% in Q3’12. EBITDA fell 42.2% to BGN 9.8m with margin shrinking to 5.3% from 10.6% in the comparable period. Depreciation charges were up 29.6% due to the extensive investment made over the last year. Net financial expenses increased by BGN 3.1m YoY mostly as a result of the increased loss from associates in Q3’13, while in Q3’12 the company booked profit from sale of subsidiaries. Net profit dropped 82.6% to BGN 2m (EPS of BGN 0.02). 9m’13 sales increased 9.6% YoY to BGN 553.8m. Exports improved by 14.7% to BGN 181.7m while domestic sales increased 7.3% to BGN 372.1m. Total revenues increased 9.8% to BGN 558.4m. EBITDA improved by 6.4% YoY to BGN 61m while the margin slightly worsened to 10.9%. Below the EBITDA line, the BGN 5.7m loss on investments (mainly from the sale of stake in Doverie United Holding at lower price than its balance sheet value) resulted in decline of the bottom line. Net income was down by 14.3% YoY to BGN 30.8m (EPS of BGN 0.24). Short-term receivables increased by BGN 30.7m from end-2012 to BGN 273.1m. CAPEX for the period amounted to BGN 32.6m, most of it spent on the new tablet factory which was finished in June. IB debt increased by BGN 4.6m from 2012-end to BGN 277.5m, but compared to end-Q2’13, it was down by BGN 7.5m.