Protek Group Announces Preliminary 4Q and 12M 2011 Operational Results

OREANDA-NEWS. March 01, 2012. Protek Group (PRTK: RTS, MICEX), one of the major pharmaceutical companies in Russia has announced its preliminary operating results for Q4-2011 and 12M 2011 according to the management accounts (unaudited).

Group Operating Highlights by segment:

The consolidated revenue of the Group* for Q4-2011 increased by 14.6% y-o-y reaching RUB 32,100 mln.

The Group’s consolidated revenue for 12M 2011 increased by 7.1% y-o-y reaching RUB 106,894 mln.

The Group’s revenue growth for 12M 2011 was facilitated by its success in the Retail Sales Segment (14.9%) and the Production Segment (16.7%).

Distribution Segment

The key company in the segment is CV Protek.

Distribution Segment Operating Highlights:

The Q4-2011 revenue of the Distribution Segment increased by 11.3% y-o-y reaching RUB 28,084 mln., mainly driven by the commercial market sales (a 21.7% growth).

The 12M 2011 revenue of the Distribution Segment increased by 3.5% y-o-y reaching RUB 93,832 mln. The Distribution Segment makes up 83% of the Group’s total revenue**.

Retail Sales Segment

The key company in the segment is Rigla.

The total number of retail outlets as of December 31, 2011 stood at 695 pharmacies.

In Q4-2011, 44 pharmacies were organically opened and 12 pharmacies were closed.

In 12M 2011, 87 pharmacies were organically opened and 40 pharmacies were closed.

Retail Sales Segment Operating Highlights:

The Q4-2011 revenue of the Retail Sales Segment increased by 9.1% reaching RUB 3,845 mln., while the growth in the comparable revenue bases (including VAT) amounted to 15.8%***.

The 12M 2011 revenue of the Retail Sales Segment increased by 14.9% reaching RUB 13,793 mln. The growth in the comparable revenue bases (including VAT) amounted to 21.9%***. The Retail Sales Segment makes up 12% of the Group’s total revenue**.

In 12M 2011, Rigla increased its market share to 2.55% and was ranked first among pharmacy chains on the retail commercial pharmaceuticals market****.

Like-for-Like (L-f-L) Sales*****:

As of December 31, 2011 the Retail Sales Segment included 454 peer pharmacies.

Retail Sales Segment Peers’ Operating Highlights:

In Q4-2011, L-f-L pharmacies revenue decreased by 2.6%. The growth in comparable revenue bases (including VAT) amounted to 9.1%***.

In 12M 2011, L-f-L pharmacies revenue decreased by 1.2%. The growth in comparable revenue bases (including VAT) amounted to 7.2%***.

“Bud Zdorov!” (Bless You!) discount pharmacies chain expansion:

As of December 31, 2011, “Bud Zdorov!” (Bless You!) discount pharmacies chain managed by Rigla included 103 pharmacies (vs. 94 outlets as of September 30, 2011).

The Q4-2011 revenue of “Bud Zdorov!” pharmacies increased by 20% y-o-y. The increase in tickets amounted to 12%.

The share of “Bud Zdorov!” pharmacies amounts to 10% of the segment revenue.

Private label expansion:

As of December 31, 2011 the range of private label products grew to 270 items (vs. 216 items as of September 30, 2011), the number of items increased by 25% in Q4-2011 vs. Q3-2011.

As of December 31, 2011 the share of private label products stood at 1.9% of the segment revenue and 4.5% of the segment gross income. The Company continues to actively increase the number of private label parapharmaceuticals.

Production Segment

The key company in the segment is Sotex.

Production Segment Operating Highlights:

The Q4-2011 revenue of the Production Segment increased by 46.1% y-o-y reaching RUB 1,811 mln.

The 12M 2011 revenue of the Production Segment increased by 16.7% reaching RUB 5,56 mln. The Production Segment makes up 5% of the Group’s total revenue**.

In 12M 2011, the number of own brands increased to 36 items y-o-y against 28 items in 12 2010. In 2011, nephrology and oncology product lines were expanded, and a new cardiology product was launched. The following new own brands were introduced in 2011: Likferr 100, Eralfon 40000 IU , Eralfon 20000 IU, Eralfon 3000 IU, Idrinol injections, BloccoC.

The 12M 2011 own brands revenue of the Production Segment increased by 69%, reaching RUB 1.282 billion against RUB 758,7 mln. in 12M 2010.

Vadim Muzyayev, President of Protek Group: “In 2011, we strove to enhance operating performance in rather challenging market conditions and make the Group’s companies more competitive. In the Retail Sales Segment we organically opened 87 pharmacies, expanded the “Bud Zdorov!” pharmacies chain to boost our diversity, and managed to significantly increase the range of private label products. In the Production Segment, we saw a successful growth of own brands sales (along with cutbacks in licensed products). In the Distribution Segment we focused on commercial market sales, enhancement of profitability and efficiency of product lines and tried to reduce operating expenses. We also drastically expanded our supplementary services (such as logistics, IT support, etc.).”

* Unaudited management accounts for Q4-2011 and 12M 2011, preliminary data.
** Calculated as each segment revenue in relation to the total revenue, excluding eliminations and segment allocations
*** Comparable revenue indicators incl. VAT following tax changes in 2011. The tax changes came into effect on January 1, 2011and regard the transfer of pharmacies from the unified tax on imputed income system to the general taxation system.
**** Pharmexpert market research center data
***** Like-for-Like indicators for the pharmacies opened or acquired 24 months prior to the current reporting period and not closed in the current reporting period