Stuttgart, 31 July 2014

  • Revenue growth of 1.8 per cent achieved
  • Decrease in adjusted EBIT of 1.7 per cent due to the discount competition in Germany and the unfavourable performance in Brazil
The course of business of Celesio AG met expectations in the first half of 2014. At EUR 10,930.8 million, group revenue was 1.8 per cent higher year-on-year. Adjusted for currency effects and changes in the consolidated group, revenue actually increased by 3.9 per cent. The market growth in Germany and the strong performance in Norway and the United Kingdom offset the fall in revenue in France and Belgium. Nevertheless, adjusted earnings before interest and taxes (EBIT) fell by 1.7 per cent, to EUR 199.1 million. This is due in particular to the ongoing intense pressure from competition in Germany and the unfavourable performance in Brazil. As reported, impairments of EUR 80 million have been taken in Brazil due to an adjustment in the long-term earnings outlook. In the first half year net financial debt decreased by EUR 310.0 million, to EUR 1,053.4 million, which is particularly attributable to the conversion of the 2014 and 2018 convertible bond. Press release (PDF, 101 KB)

"All in all, despite strong headwinds, Celesio maintained its course well in the first half of 2014. We expect this trend to continue for the rest of the year," said Marc Owen, new Chairman of the Management Board of Celesio AG. "As our relationship with McKesson evolves, it is our prime goal to ensure that not just Celesio, but also all its partners, customers and employees benefit as quickly as possible from the added value generated by joint procurement with McKesson and an extended product range."

Performance in the divisions
Revenue in the Consumer Solutions division, which is responsible for the pharmacy business, increased by a significant 6.0 per cent, from EUR 1,680.4 million to EUR 1,781.2 million. Adjusted for currency effects, revenue increased by 5.4 per cent.

Adjusted for non-recurring items, EBIT was up by a substantial 11.9 per cent, to EUR 106.8 million (unadjusted: -6.4 per cent). When also adjusted for currency effects, EBIT rose by 11.5 per cent.

In the United Kingdom, Celesio's most important pharmacy market, Lloydspharmacy performed well in line with expectations in the first half of 2014. The revenue increase in services, predominantly in contracts with hospitals and the provision of homecare, more than compensated for the negative effects of governmental measures and increased costs in connection with the accelerated expansion of the European Pharmacy Network. Central purchasing activities also improved earning power.

The course of business in Italy increasingly benefited from revenue and earnings from non-prescription products, which completely offset the decline in revenue from prescription medications due to continued government cutbacks. In the Swedish pharmacy business, higher revenue had a disproportionately high impact on earnings as a result of the simultaneous improvement in cost management.

Revenue for the Pharmacy Solutions division - responsible for our wholesale business - amounted to EUR 9,149.6 million, 1.1 per cent up on the prior-year figure of EUR 9,052.7 million. In particular, currency effects caused by the Brazilian real and the deconsolidation of the Irish wholesale business in May 2013 had an adverse impact on performance in the reporting period. After adjustment for currency effects, revenue increased by 2.6 per cent. However, when also adjusted for the effects of changes in the consolidated group, revenue increased by a significant 3.7 per cent.

EBIT dropped 65.5 per cent in the first half of 2014, from EUR 153.2 million to EUR 52.8 million. The decrease in earnings is predominantly related to the extraordinary impairment loss on the goodwill of the Brazilian activities. Adjusted for non-recurring items, EBIT fell 9.1 per cent, to EUR 138.9 million. When also adjusted for currency effects, EBIT sank by 10.2 per cent.

In the British wholesale business, a more favourable product mix, coupled with better purchasing conditions and additional efficiency increases, led to a gratifying increase in earnings. The market continued to decline in France. Rigorously applied measures to increase efficiency did not fully offset these negative effects. In Germany, both the further intensification in discount competition and higher sales of high-end products with lower gross profit margins weighed on results. In Brazil, earnings power was dampened by the extraordinary impairment loss on goodwill, despite revenue growth having been achieved.

Earnings forecast
Celesio will consistently pursue the group's strategic realignment in 2014. Both cost structures and company efficiency will continue to be optimised. The expansion of the European Pharmacy Network will also have a positive impact, enabling even stronger growth from 2015 onwards. However, these revenues will still be reduced in part by IT project costs in 2014. Overall, adjusted EBIT for the 2014 fiscal year is expected to be slightly higher than that of the prior year.

The key figures of the Celesio Group can be found in the PDF.

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