Grifols' : revenues increase by +5.6% to Euros 959 million, driven by growth of +10.9% for the Bioscience Division Download (256.2 Kb)

a932c575-1505-4f69-8430-2f6a724e7e29.pdf Grifols' revenues increase by +5.6% to Euros 959 million, driven by growth of +10.9% for the Bioscience Division

• The Bioscience Division grows by +10.9% (+6.3% cc1) and generates revenues of Euros 754.9 million. Positive growth of sales of the main plasma proteins
• Recurring revenues (excluding Raw Materials and Others) rise by +7.1% (+2.9% cc) to Euros 938.8 million
• The company continues to strengthen its geographical expansion: sales in ROW (Rest of World) increase by +15.6% (+15.8 cc)
• Solid operating results: EBITDA rises to Euros 282.5 million (+0.9%) and the EBITDA margin stands at 29.5% of revenues
• Increased depreciation charges for the new fractionation plant and a higher effective tax rate have a negative impact on net profit, which amounts to Euros 125.2 million and represents 13.1% of revenues
• The progressive reduction of leverage continues. The net debt to EBITDA ratio stands at 3.10x in March 2016 compared to 3.19x in December 2015
• Operating cash generation is maintained in order to fund growth projects. The cash balance is more than Euros 1,000 million and the liquidity position exceeds Euros 1,450 million
• The company has announced a new industrial expansion plan and continues with its initiatives to increase access to plasma

  Barcelona, 5 May 2016.- Grifols (MCE: GRF, MCE: GRF.P and NASDAQ: GRFS) increased its net revenues by +5.6% (+1.5% cc) to Euros 958.9 million in the first quarter of 2016. Recurring sales (excluding Raw Materials and Others) grew by +7.1% (+2.9% cc), with revenues of Euros 938.8 million.

  The Bioscience Division was the main driver of growth, with revenues rising by +10.9% (+6.3% cc) to Euros 754.9 million. The demand for plasma proteins continued its upward trend, with growth in the main proteins and a notable contribution from sales of alpha-1 antitrypsin and albumin. The company maintained the leadership position of its IVIG at global level2.

  Revenues of the Diagnostic Division amounted to Euros 161.0 million, decreasing by -6.7% (-9.9% cc). For comparison purposes, the revenues reported in the first quarter of 2015 included the impact of certain contracts for systems using NAT technology (Procleix® NAT

  1Constant currency(cc) excludes the impact of exchange rate movements

  2Market Research Bureau (MRB) 2014 dated February 2016

  Solutions) signed in Japan, as well as higher revenues deriving from the old contract signed with Abbott, which remained in force during the first half of 2015. The new contract signed in July 2015, with a total value of approximately USD 700 million, includes new conditions and extends the supply of antigens until 2026.

  Revenues of the Hospital Division were stable at Euros 22.8 million compared with Euros 23.3 million for the same period of 2015, falling by -1.8% (-1.2% cc). These revenues continue to be impacted by the slowdown in public tenders relating to the areas of Pharmatech (which includes hospital logistics) and Contract Manufacturing. Grifols continues to lay the foundations for the growth of this division in the United States.

  Grifols' EBITDA rose by +0.9% to Euros 282.5 million. The EBITDA margin was 29.5% of revenues.

  The geographic mix of revenues and improved manufacturing efficiencies helped to offset the negative impact on margins caused by the simultaneous operation of the two fractionation plants in Clayton (North Carolina, United States) while all production is transferred to the new plant; as well as higher plasma costs from the acceleration of investments for the opening of new donor centres, and the trend towards greater incentives to reward donors for their time. The margins seen in the first quarter of 2015 were also favoured by revenues from royalties relating to the transfusion diagnostics unit, which decline in 2016.

  EBIT was impacted by the higher depreciation charges expected following the progressive start of operations at the new fractionation plant at Clayton. In the first quarter of 2016, EBIT stood at Euros 231.5 million (-2.1%), representing 24.1% of revenues.

  The financial result improved due to lower financial expenses mainly related to the lower impact of exchange differences.

  Grifols' net profit was Euros 125.2 million (-2.5%). This represents 13.1% of the company's net revenues. The increase in depreciation charges relating to the new fractionation plant and a higher effective tax rate compared with the first quarter of 2015 explain its evolution.

  Grifols' effective tax rate was 24.0%, reflecting the contribution of profits from the different geographical regions in which the company operates.

  At the end of the first quarter of 2016, net financial debt was Euros 3,614.7 million, showing the progressive reduction of indebtedness. Most of the company's financial debt is denominated in US Dollars and was favoured by the moderate appreciation of the Euro against the Dollar in the first quarter of the year. Consequently, the net debt to EBITDA ratio fell to 3.10x, compared with 3.19x reported in December 2015. Excluding the exchange rate impact, it was 3.22x.

  Grifols maintains strong operating cash generation in order to fund planned growth projects and meet its objective of reducing financial leverage, which remains a priority.

  At 31 March 2016, the company's cash position exceeded Euros 1,000 million, with undrawn credit lines for more than Euros 450 million. The group's liquidity position was above Euros 1,450 million.

  Total consolidated assets as at March 2016 were Euros 9,239.0 million.

  On 4 January 2016, the stock split approved by Grifols' Board of Directors became effective. Consequently, the company's share capital as at 31 March 2016 was unchanged at Euros 119.6 million, although the total number of shares was modified. Following the stock split, Grifols' share capital was represented by 426,129,798 ordinary shares (Class A) with a nominal value of Euros 0.25 per share and 261,425,110 non-voting shares (Class B) with a nominal value of Euros 0.05 per share.

  Key figures for the first quarter of 2016:

  In millions of euros except % and EPS NET REVENUE (NR)	1Q 2016	1Q 2015	% Var
  	958.9	908.4	5.6%
  GROSS MARGIN	49.4%	49.7%
  R&D % NR	47.7 5.0%	50.9 5.6%	(6.4%)
  EBITDA % NR	282.5 29.5%	280.0 30.8%	0.9%
  EBIT % NR	231.5 24.1%	236.4 26.0%	(2.1%)
  GROUP PROFIT % NR	125.2 13.1%	128.5 14.1%	(2.5%)
  ADJUSTED(1) GROUP PROFIT % NR	140.2 14.6%	148.7 16.4%	(5.7%)

  CAPEX	57.5	68.3	(15.8%)
  EARNINGS PER SHARE (EPS)(2)	0.18	0.19	(5.3%)

  TOTAL ASSETS	March 2016	December 2015	% Var
  	9,239.0	9,601.7	(3.8%)
  TOTAL EQUITY	3,297.4	3,301.4	(0.1%)
  CASH & CASH EQUIVALENTS	1,007.6	1,142.5	(11.8%)
  LEVERAGE RATIO	(3.10/3.22cc)(3)	3.19

  (1) Excludes non-recurring costs and associated with recent acquisitions, amortization of deferred expenses associated to the refinancing and amortization of intangible assets related to acquisitions

  (2) EPS as of March 31, 2015 calculated taking into consideration the 2:1 split effective 4 January 2016

  (3) Constant currency (cc) excludes the impact of exchange rate movements

  REVENUES BY DIVISION
• Bioscience Division: 78.7% of revenues

Revenues of the Bioscience Division rose by +10.9% compared with the first quarter of 2015, to Euros 754.9 million. On a like-for-like basis, at constant exchange rates (cc), they grew by

+6.3%. The company is focused on the growth in demand for its main proteins, geographical expansion and innovation.

Sales of alpha-1 antitrypsin contributed significant growth driven by North America and Europe, which is the result of the effectiveness of Grifols alpha-1 screening programs in those regions. Sales of this protein continue to be one of the division's drivers of growth, and reflect the ongoing commercial efforts made to strengthen the pneumology area and to position Grifols in the field of respiratory diseases.

Sales of albumin were very strong in China and the United States, the main markets for this protein, while sales of factor VIII maintained its upward trend, driven by growth in the commercial market, mainly in the United States, and by the increased volumes provided by the public tenders market. The growth in sales of IVIG was steady, with a stabilisation of the competitive dynamic seen for this plasma product in the United States in recent periods.

Grifols continued with its strategy of pursuing balanced growth in sales of plasma products in order to optimise raw materials costs and production capacity.

The most significant milestones of the first quarter of 2016 included the following:

• FDA approval to use the fraction IV-1 produced at the Parets del Vallès fractionation plant (Barcelona, Spain) in the purification plant also located in Parets del Vallès for producing the alpha-1 antitrypsin marketed in Europe. Until that time, it had been possible to use only the intermediate product manufactured at the Clayton fractionation plant, so this approval provides flexibility, agility and greater efficiency for the production processes, in line with Grifols' goals.

• Grifols' logistics centre in Ireland obtained authorisation from the Irish medicines agency (Health Products Regulatory Authority, HPRA) to import and store plasma and intermediate products, as well as to import, label and distribute finished medicinal products from Grifols' three hemoderivatives manufacturing plants in the United States and Spain. This authorisation represents an important milestone for the start of activity in the facilities.

With regard to investment, the company continues with its policy of increasing its industrial capacity and plasma collection. To this end, Grifols has announced a new industrial expansion plan and is going ahead with its initiatives to increase plasma availability by opening new donor centres in the United States. In this regard, after the end of the first quarter, Grifols announced the agreement with Interstate Blood Bank Inc. (IBBI) to acquire 49% of its share capital for USD 100 million, subject to approval by the US competition authorities. In this way, Grifols strengthens its existing commercial ties with this company.