Gedeon Richter forecasts 6% drop in revenue for 2014
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Hungary-based pharmaceutical producer Gedeon Richter expects revenue to fall 6% this year due to a decline in turnover in Russia, Ukraine and the CEE region, CEO Erik Bogsch stated today after the company published its Q1 earnings.
Sales in Russia, calculated in rubles, could fall by 5% in 2014, Bogsch said, adding that the whole market had contracted in Q1, but Richter had retained its market share.
In February, the company projected Russian sales would be between the breakeven point or see up to a 5% year-on-year increase.
Bogsch noted that the new guidance for Russian sales calculated as a 20% drop in euros, because of the weaker ruble: The Russian currency depreciated 13% against the forint in the first quarter of 2014, and just about one-third of Richter sales are based in the country.
Richter’s sales in Ukraine, calculated in dollars, are set to fall by 35%. Last year, turnover in the country came to $95 million. Bogsch blamed the decline on price increases and lower purchasing power because of the political and economic uncertainty in the country.
For other markets, sales in other CIS countries are expected to rise by 5% to 10%. Richter modified guidance for sales in Poland to a 0% to 5% drop from a 0% to 5% increase forecast earlier. Sales in the CEE region and Hungary are set to stagnate; EU-15 sales are expected to increase 10% to 15%, while US sales are expected to fall 10% to 15%.
Turnover in China for Gedeon Richter is set to rise to €40 million from the €35 million posted in 2013.
Bogsch said guidance for operating profit margin was lowered to 11% from 12-13% in February. He noted that the proportion of consolidated revenue generated in China had risen to 4% in Q1 from 3% in the same period a year earlier. At the same time, the proportions of turnover in Russia and Ukraine fell from 28% to 22% and from 6% to 5%, respectively.
-- David Landry contributed to this article
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