Richter Earnings Slip as Financial Loss Weighs

Net income of Hungarian pharmaceutical company Gedeon Richter fell 7% year-on-year to HUF 163.3bn in Q1-Q3, dropping on a financial loss, an earnings report posted ahead of the opening bell on Thursday shows.

Revenue rose 7% to HUF 680.2 billion and operating profit climbed 8% to HUF 204.5 billion.

A net financial loss of HUF 9.5 billion, after a net gain of HUF 5.8 billion in the base period, weighed on the bottom line. FX losses came to HUF 24.7 billion in Q1-Q3, including HUF 18.9 billion in Q3 alone, mostly due to the weaker dollar and the stronger forint, Richter said.

Richter also noted the the negative impact of a "slightly higher" effective tax rate, boosted by deferred tax expenses.

Earnings per share came to HUF 893.

North America was Richter's biggest market in Q1-Q3, generating turnover of HUF 200.8 billion, up 9%. Royalties from sales of Vraylar, the brand name there for Richter's antipsychotic cariprazine, came to HUF 181.0 billion, an increase of 10%.

Richter adjusted its full-year guidance for pharmaceutical revenue, at constant exchange rates, to "close to EUR 2.3 billion". Operating profit, adjusted for one-offs and at constant exchange rates, is expected to grow 8-10%.

Pharma sales reached EUR 1.67 billion in Q1-Q3, while the segment's clean operating profit rose nearly 8% to EUR 534m.

At a press conference after the release of the report, CFO László Kovács said the innovative, neuropsychiatric and women's health segments continued to show robust growth, but the generic products segment faced challenges and in the biotech segment, CDMO revenues remained below expectations due to US regulatory changes.

In the next 12 months, Richter plans to launch 4 products and 3 biosimilar molecules, he added.

R+D spending fell 3% in Q1-Q3. It declined 20% in the biotech segment but increased in the women's healthcare segment.

László Kovács said Richter came close to two major acquisitions in the women's healthcare segment during the period but its last-round offers stalled.

He said the profitability outlook is positive and the dividend rate could increase further next year.