KRKA, D. D. Krka and Krka Group
Unaudited Report
Q1 2024
Novo mesto, May 2024
CONTENTS | |
Marketing and Sales | 11 |
Research and development | 16 |
Investments | 17 |
Employees | 19 |
Condensed consolidated financial statements of the Krka Group, with Notes | 20 |
Consolidated statement of financial position of the Krka Group | 20 |
Consolidated income statement of the Krka Group | 21 |
Consolidated statement of other comprehensive income of the Krka Group | 21 |
Consolidated statement of changes in equity of the Krka Group | 22 |
Consolidated statement of cash flows of the Krka Group | 24 |
Segment reporting of the Krka Group | 25 |
Notes to consolidated financial statements of the Krka Group | 26 |
Condensed financial statements of Krka, d. d., Novo mesto, with Notes | 32 |
Statement of financial position of Krka, d. d., Novo mesto | 32 |
Income statement of Krka, d. d., Novo mesto | 33 |
Statement of other comprehensive income of Krka, d. d., Novo mesto | 33 |
Statement of changes in equity of Krka, d. d., Novo mesto | 34 |
Statement of cash flows of Krka, d. d., Novo mesto | 36 |
Notes to financial statements of Krka, d. d., Novo mesto | 37 |
Statement of compliance | 43 |
2 | Krka and Krka Group Unaudited Report Q1 2024 |
INTRODUCTION
Condensed consolidated financial statements of the Krka Group and condensed financial statements of Krka, d. d., Novo mesto (hereinafter also Krka, the Company, or the controlling company) for the first quarters of 2024 and 2023 are unaudited, while financial statements for the full financial year 2023 are audited. Krka, d. d., Novo mesto has no authorised capital and made no conditional share capital increase.
Krka promptly announces all significant data changes in its listing prospectus via the Ljubljana Stock Exchange electronic information dissemination system (SEOnet) and the Polish Financial Supervision Authority electronic information dissemination system (ESPI). Reports on business operations of the Krka Group and the Company are available on the Krka website www.krka.biz.
At its regular meeting of 15 May 2024, the Supervisory Board of Krka discussed the unaudited report of the Krka Group and the Company for the first quarter of 2024.
Q1 2024 business performance highlights
- The Krka Group recorded €484.1 million in sales of products and services, of which product sales accounted for almost 98%.
- Product and service sales increased by 6% year on year.
- We generated 94% of product and service sales outside Slovenia. Exports accounted for 96% of product sales.
-
Krka's largest sales region was Region East Europe, accounting for 32.3% of total sales, followed by Region
Central Europe and Region West Europe. - The Krka Group generated operating profit (EBIT) of €114.2 million, down 5% year on year. The EBIT margin was 23.5%. Earnings before interest, tax, depreciation, and amortisation (EBITDA) amounted to €138.5 million, while EBITDA margin reached 28.5%.
- The Krka Group net finance result was positive and totalled €4.5 million, while in the first quarter of last year it was negative in the amount of €13.6 million .
- The Krka Group profit before tax increased by 11% year on year, and totalled €118.6 million.
- The Krka Group recorded net profit of €98.8 million, up 11% on the same period last year. Net profit margin was 20.3%.
- As at 31 March 2024, the Krka share traded at €128.50 on the Ljubljana Stock Exchange, up 17% on the year- end 2023. Market capitalisation totalled €4.2 billion. From January to the end of March 2024, Krka repurchased treasury shares in total of €6.6 million.
- We extended our product portfolio with five new prescription pharmaceuticals.
- The Krka Group allocated €27.0 million to investments, of that €20.0 million to the controlling company.
- At the end of March 2024, the Krka Group had 11,795 regularly employed persons on payroll. Total headcount, including agency workers, was 12,675.
Krka and Krka Group Unaudited Report Q1 2024 | 3 |
Financial highlights
Krka Group | Company | |||||
€ thousand | Jan-Mar 2024 | Jan-Mar 2023 | Index | Jan-Mar 2024 | Jan-Mar 2023 | Index |
Revenue | 486,145 | 458,184 | 106 | 458,696 | 443,241 | 103 |
- Of that revenue from contracts with | 484,104 | 456,253 | 106 | 399,670 | 374,589 | 107 |
customers (products and services) | ||||||
Gross profit | 279,941 | 279,595 | 100 | 260,024 | 247,406 | 105 |
Earnings before interest, tax, | ||||||
depreciation and amortisation | 138,468 | 146,192 | 95 | 129,139 | 124,080 | 104 |
(EBITDA) | ||||||
Operating profit (EBIT)1 | 114,188 | 120,094 | 95 | 111,561 | 104,186 | 107 |
Profit before tax (EBT) | 118,644 | 106,520 | 111 | 115,886 | 89,475 | 130 |
Net profit | 98,772 | 89,011 | 111 | 97,825 | 75,579 | 129 |
Effective tax rate | 16.7% | 16.4% | 15.6% | 15.5% | ||
R&D expenses | 46,864 | 43,914 | 107 | 46,023 | 42,851 | 107 |
Investments | 26,996 | 21,843 | 124 | 19,958 | 18,072 | 110 |
€ thousand | 31 Mar 2024 | 31 Dec 2023 | Index | 31 Mar 2024 | 31 Dec 2023 | Index |
Non-current assets | 1,010,292 | 1,059,267 | 95 | 1,028,431 | 1,076,235 | 96 |
Current assets | 1,847,053 | 1,705,024 | 108 | 1,634,407 | 1,537,636 | 106 |
- Inventories | 604,139 | 604,621 | 100 | 508,426 | 513,892 | 99 |
- Trade receivables | 565,833 | 509,070 | 111 | 529,364 | 463,126 | 114 |
- Cash and cash equivalents | 246,599 | 174,011 | 142 | 165,787 | 140,993 | 118 |
Equity | 2,275,130 | 2,181,766 | 104 | 2,225,994 | 2,133,258 | 104 |
Non-current liabilities | 150,847 | 149,218 | 101 | 119,845 | 118,930 | 101 |
Current liabilities | 431,368 | 433,307 | 100 | 316,999 | 361,683 | 88 |
- Trade payables | 162,430 | 153,762 | 106 | 176,615 | 175,847 | 100 |
RATIOS | Jan-Mar 2024 | Jan-Mar 2023 | Jan-Mar 2024 | Jan-Mar 2023 |
Gross profit margin | 57.6% | 61.0% | 56.7% | 55.8% |
EBITDA margin | 28.5% | 31.9% | 28.2% | 28.0% |
EBIT margin | 23.5% | 26.2% | 24.3% | 23.5% |
EBT margin | 24.4% | 23.2% | 25.3% | 20.2% |
Net profit margin (ROS) | 20.3% | 19.4% | 21.3% | 17.1% |
Return on equity (ROE)2 | 17.7% | 16.4% | 18.0% | 14.4% |
Return on assets (ROA)3 | 14.1% | 13.1% | 14.8% | 11.8% |
Liabilities/Equity | 0.256 | 0.250 | 0.196 | 0.222 |
R&D expenses/Revenue | 9.6% | 9.6% | 10.0% | 9.7% |
NUMBER OF EMPLOYEES | 31 Mar 2024 | 31 Dec 2023 | Index | 31 Mar 2024 | 31 Dec 2023 | Index | |
Balance | 11,795 | 11,780 | 100 | 6540 | 6509 | 100 | |
SHARE INFORMATION | Jan-Mar 2024 | Jan-Mar 2023 | Index | ||||
Total number of shares issued | 32,793,448 | 32,793,448 | 100 | ||||
Earnings per share (EPS) in €4 | 12.82 | 11.49 | 112 | ||||
Closing price at end of period in €5 | 128.50 | 108.00 | 119 | ||||
Price/Earnings ratio (P/E) | 10.02 | 9.40 | 107 | ||||
Book value in €6 | 69.38 | 67.38 | 103 | ||||
Price/Book value (P/B) | 1.85 | 1.60 | 116 | ||||
Market capitalisation in € thousand (end of period) | 4,213,958 | 3,541,692 | 119 |
- The difference between operating income and expenses
- Net profit, annualised/Average shareholders' equity in the period
- Net profit, annualised/Average total asset balance in the period
- Net profit attributable to majority equity holders of the Krka Group, annualised/Average number of shares issued in the period, excluding treasury shares
- Share price on the Ljubljana Stock Exchange
- Equity at end of period/Total number of shares issued
4 | Krka and Krka Group Unaudited Report Q1 2024 |
Krka d. d. ID card
Registered office Šmarješka cesta 6, 8501 Novo mesto, Slovenia
Telephone +386 (0) 7 331 21 11
Fax +386 (0) 7 332 15 37
E-mail info@krka.biz
Website www.krka.biz
Core business Manufacture of pharmaceutical preparations
Business classification code 21200
Year established 1954
Registration entry 1/00097/00, District Court of Novo mesto, Slovenia
Tax number 82646716
VAT number SI82646716
Company ID number 5043611000
Share capital €54,732,264.71
Total number of shares issued 32,793,448 ordinary registered no-par value shares, KRKG stock symbol. Krka has been listed on the Ljubljana Stock Exchange since 1997 under the KRKG stock symbol, and since April 2012 additionally on the Warsaw Stock Exchange under the KRK stock symbol.
Krka Group at a glance
The Krka Group consists of the controlling company, Krka, d. d., Novo mesto, a subsidiary in Slovenia, Terme Krka, d. o. o., Novo mesto, and 33 subsidiaries outside Slovenia. The controlling company has a 100% stake in all subsidiaries except in Ningbo Krka Menovo Pharmaceutical Co. Ltd., where Krka holds a 60% stake and the Chinese partner, Ningbo Menovo Pharmaceutical Co. Ltd., a 40% stake.
The Krka Group develops, produces, markets, and sells human health products (prescription pharmaceuticals and non-prescription products), animal health products, and health resort and tourist services.
Production takes place in the controlling company in Slovenia and at Krka subsidiaries in the Russian Federation, Poland, Croatia, and Germany. These subsidiaries, apart from Krka-Rus in the Russian Federation, deal with marketing and sales in addition to production. In China, production takes place in facilities subject to a long-term lease. Other subsidiaries outside Slovenia market and/or sell Krka products but do not have production capacities. The subsidiary Terme Krka provides health resort and tourist services and is the owner of Golf Grad Otočec.
Krka Group business objectives for 2024
- Product and service sales are projected to reach €1,850 million.
- The proportion of sales in markets outside Slovenia is estimated at 94%.
- Prescription pharmaceuticals are expected to remain the most important product class, accounting for 81% of total sales.
- Net profit is planned at just over €310 million.
- The total number of employees in Slovenia and abroad is projected to increase by 3%.
- €150 million primarily in expanding production and development facilities, infrastructure, and technological upgrades.
The 2024 business objectives derive from the 2024-2028Krka Group Development Strategy and are based on estimates, assessments, projections, and other available data. The Management Board believe the projections are reasonable. In the event of major changes in the business environment, e.g. price erosion, rising prices of raw materials, changes in exchange rates for certain currencies important for Krka, and lower demand for pharmaceutical products, the actual operating results can deviate from the plan.
Krka and Krka Group Unaudited Report Q1 2024 | 5 |
BUSINESS REPORT
Financial risks
Foreign exchange risk
Krka's key currency risk management policy remains to mitigate currency risk exposure by natural hedging. We also use financial instruments to a limited extent.
The Russian rouble continues to represent the largest Krka Group currency risk. International markets offer no financial instruments to mitigate this risk, therefore we have adopted natural hedging strategies.
The value of the Russian rouble denominated in the euro was stable over the course of the first three months of 2024, while the average value of the rouble expressed in the euro dropped by 20.3% year on year.
We continued to hedge the risk exposure to US dollar with financial instruments in the first quarter of 2024. Unlike with other currencies, exposure to the US dollar arises from a surplus of liabilities over assets from regular business operations, or in other words, the currency position is short. Exposure to the US dollar arises primarily from purchasing raw and other materials.
The value of the US dollar denominated in euros increased by 2.2% during the first quarter, while year on year the dollar's average value dropped by 1.2%.
Krka's other important currencies on the sell-side remained stable in the first quarter of 2024.
Total net financial gain for the first quarter of 2024 amounted to €4.5 million, taking into account net foreign exchange differences, income and expenses from financial instruments, interest income and expense, and other financial income and expenses.
Credit risk
The key credit risk of the Krka Group arises from trade receivables. The centralised credit control process at the Krka Group level includes all customers with credit limits exceeding €20,000. The list included over 670 such customers at the end of the first quarter of 2024, accounting for more than 95% of total trade receivables. Credit control of small customers is decentralised and carried out in the sales network under the constant supervision of the controlling company.
Our credit risk management policy remained unchanged in the first three months of 2024. At the end of this period, more than 90% of Krka Group trade receivables were insured with a credit insurance company.
At the end of the first quarter, the total value of trade receivables denominated in euros was up 11% from the beginning of the year. The maturity structure of receivables remained stable. The percentage of overdue receivables compared to total trade receivables remained within acceptable limits at the end of the first quarter.
Investor and share information
The Krka share price on the Ljubljana Stock Exchange increased by 16.8% during the first three months of 2024, trading at €128.50 on 31 March 2024. There were no major changes in the shareholder structure in the reported period. Krka had 47,059 shareholders at the end of March 2024.
6 | Krka and Krka Group Unaudited Report Q1 2024 |
Shareholder structure (%)
31 Mar 2024 | 31 Dec 2023 | |||
Slovenian retail investors | 41.1 | 41.1 | ||
Slovenski državni holding (SDH, Slovenian Sovereign Holding) and the | 16.2 | 16.2 | ||
Republic of Slovenia | ||||
Kapitalska družba, d. d. (Pension Fund Management) and Prvi pokojninski | 10.9 | 10.9 | ||
sklad (First Pension Fund) | ||||
Slovenian legal entities and institutional investors | 5.5 | 5.5 | ||
Foreign investors | 20.3 | 20.5 | ||
Treasury shares | 6.0 | 5.8 | ||
Total | 100.0 | 100.0 |
In first quarter of 2024, Krka repurchased a total of 54,634 treasury shares, thus holding 1,970,600 treasury shares at the end of March 2024, accounting for 6.009% of its share capital.
Ten largest shareholders as at 31 March 2024
No. of | Equity | Voting rights | ||
Country | shares | (%) | (%) | |
Kapitalska družba, d. d. | Slovenia | 3,493,030 | 10.65 | 11.33 |
Slovenski državni holding, d. d. | Slovenia | 2,949,876 | 9.00 | 9.57 |
Republic of Slovenia | Slovenia | 2,366,141 | 7.22 | 7.68 |
OTP banka d.d.* | Croatia | 1,526,910 | 4.66 | 4.95 |
Erste Group Bank AG - PBZ Croatia Osiguranje* | Austria | 1,331,938 | 4.06 | 4.32 |
Clearstream Banking S.A.* | Luxembourg | 1,029,827 | 3.14 | 3.34 |
Luka Koper, d. d. | Slovenia | 433,970 | 1.32 | 1.41 |
KDPW* | Poland | 345,851 | 1.05 | 1.12 |
State Street Bank and Trust* | USA | 344,979 | 1.05 | 1.12 |
Privredna banka Zagreb d.d.* | Croatia | 318,434 | 0.97 | 1.03 |
Total | 14,140,956 | 43.12 | 45.88 |
* The shares are on custody accounts with the above banks and are owned by their clients.
Equity holdings and voting rights of Management and Supervisory Board members as at 31 March 2024
Equity | Voting rights | ||
No. of shares | (%) | (%) | |
Management Board members | |||
Jože Colarič | 22,500 | 0.069 | 0.073 |
Aleš Rotar | 13,915 | 0.042 | 0.045 |
Vinko Zupančič | 120 | 0.000 | 0.000 |
Milena Kastelic | 505 | 0.002 | 0.002 |
Total Management Board members | 37,040 | 0.113 | 0.120 |
Supervisory Board members | |||
Julijana Kristl | 230 | 0.001 | 0.001 |
Matej Lahovnik | 1,000 | 0.003 | 0.003 |
Mojca Osolnik Videmšek | 617 | 0.002 | 0.002 |
Franc Šašek | 500 | 0.002 | 0.002 |
Tomaž Sever | 500 | 0.002 | 0.002 |
Total Supervisory Board members | 2,847 | 0.009 | 0.009 |
Total Management and Supervisory Board | 39,887 | 0.122 | 0.129 |
members | |||
Krka and Krka Group Unaudited Report Q1 2024 | 7 |
Krka share trading from January to March 2024
3,000 | 135 | ||||
2,500 | 130 | ||||
volume (€ thousand) | 2,000 | 125 | Closing price (€) | ||
1,500 | 120 | ||||
1,000 | 115 | ||||
Trading | 500 | 110 | |||
0 | 105 | ||||
31 dec 2023 | 31 jan 2024 | 29 feb 2024 | 31 mar 2024 |
Trading volume on LJSE | Trading volume on WSE | Closing price on LJSE | ||
Krka had a market capitalisation of €4.2 billion on the Ljubljana Stock Exchange as at 31 March 2024. The average daily trading volume in the Krka share was €0.6 million over the reported period.
Krka Group performance analysis
Income
€ thousand | Jan-Mar 2024 | Jan-Mar 2023 | Index |
Revenue from contracts with customers on sales of | 484,104 | 456,253 | 106 |
products and services | |||
Revenue from contracts with customers on sales of | 2,042 | 1,931 | 106 |
material, and other revenue | |||
Total revenue | 486,145 | 458,184 | 106 |
Other operating income | 2,049 | 1,184 | 173 |
Finance income | 8,788 | 4,510 | 195 |
Total income | 496,982 | 463,878 | 107 |
8 | Krka and Krka Group Unaudited Report Q1 2024 |
Sales by period
€ million
500
400
300
200
100
458 | 486 | |
432 | ||
Jan-Mar 2022Jan-Mar 2023Jan-Mar 2024
Expenses
Jan-Mar | Percent | Jan-Mar | Percent | ||
€ thousand | 2024 | of revenue | 2023 | of revenue | Index |
Cost of goods sold | 206,204 | 42.4 | 178,589 | 39.0 | 115 |
Selling and distribution expenses | 90,662 | 18.7 | 88,914 | 19.4 | 102 |
R&D expenses | 46,864 | 9.6 | 43,914 | 9.6 | 107 |
General and administrative expenses | 30,276 | 6.2 | 27,857 | 6.1 | 109 |
Total operating expenses | 374,006 | 76.9 | 339,274 | 74.1 | 110 |
Finance expenses | 4,332 | 0.9 | 18,084 | 3.9 | 24 |
Total expenses | 378,338 | 77.8 | 357,358 | 78.0 | 106 |
Operating results
€ thousand | Jan-Mar 2024 | Jan-Mar 2023 | Index |
Earnings before interest, tax, depreciation and | 138,468 | 146,192 | 95 |
amortisation (EBITDA) | |||
Operating profit (EBIT) | 114,188 | 120,094 | 95 |
Profit before tax (EBT) | 118,644 | 106,520 | 111 |
Net profit | 98,772 | 89,011 | 111 |
Net profit by period
€ million
100
80
60
40
20
99
91 | 89 |
Jan-Mar 2022 | Jan-Mar 2023 | Jan-Mar 2024 |
Krka and Krka Group Unaudited Report Q1 2024 | 9 |
Assets
€ thousand | 31 Mar 2024 | % | 31 Dec 2023 | % | Index |
Non-current assets | 1,010,292 | 35.4 | 1,059,267 | 38.3 | 95 |
Attributable to: | |||||
- Property, plant and equipment | 795,232 | 27.8 | 790,345 | 28.6 | 101 |
- Intangible assets | 101,136 | 3.5 | 102,348 | 3.7 | 99 |
Current assets | 1,847,053 | 64.6 | 1,705,024 | 61.7 | 108 |
Attributable to: | |||||
- Inventories | 604,139 | 21.1 | 604,621 | 21.9 | 100 |
- Trade receivables and other receivables | 618,630 | 21.7 | 560,434 | 20.3 | 110 |
Total assets | 2,857,345 | 100.0 | 2,764,291 | 100.0 | 103 |
Equity and liabilities
€ thousand | 31 Mar 2024 | % | 31 Dec 2023 | % | Index | ||
Equity | 2,275,130 | 79.6 | 2,181,766 | 78.9 | 104 | ||
Non-current liabilities | 150,847 | 5.3 | 149,218 | 5.4 | 101 | ||
Attributable to provisions: | 125,566 | 4.4 | 124,398 | 4.5 | 101 | ||
- Provisions for post-employment benefits | 114,478 | 4.0 | 113,286 | 4.1 | 101 | ||
and other non-current employee benefits | |||||||
- Provisions for lawsuits | 10,582 | 0.4 | 10,582 | 0.4 | 100 | ||
- Other provisions | 506 | 0.0 | 530 | 0.0 | 95 | ||
Current liabilities | 431,368 | 15.1 | 433,307 | 15.7 | 100 | ||
- Trade payables | 162,430 | 5.7 | 153,762 | 5.6 | 106 | ||
- Contract liabilities | 170,306 | 6.0 | 162,173 | 5.9 | 105 | ||
- Other current liabilities | 98,632 | 3.4 | 117,372 | 4.2 | 84 | ||
Total equity and liabilities | 2,857,345 | 100.0 | 2,764,291 | 100.0 | 103 |
Performance ratios
35
30
25
20
%
15
10
5
0
30.9 31.9
28.5 | 26.2 | ||||||||
30.4 | 24.8 | ||||||||
23.5 | 21.0 | 20.3 | |||||||
24.8 | 19.4 | 18.5 | 16.4 | 17.7 | |||||
20.2 | |||||||||
17.5 | 14.0 | 13.1 14.1 | |||||||
13.7 |
EBITDA margin | EBIT margin | Net profit margin | ROE | ROA | ||||
Jan-Mar 2022 | Jan-Mar 2023 | Jan-Mar 2024 | Average | |||||
All performance ratios are in line with the Krka Group key strategic objectives.
10 | Krka and Krka Group Unaudited Report Q1 2024 |
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KRKA dd published this content on 16 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 May 2024 07:39:04 UTC.
