OREANDA-NEWS. November 2, 2012. Protek Group (PRTK: RTS, MICEX), one of the major pharmaceutical companies in Russia, has announced its preliminary operating results for Q3-2012 and 9M 2012 according to the management accounts (unaudited).

Group Operating Highlights by segment:

Revenue, RUB mln.

Group

Distribution

Retail Sales

Production

Eliminations

Q3-2012

30,411

26,840

3,883

1,275

-1,587

Q3-2011

27,282

24,273

3,199

1,275

-1,464

Change, 2012/2011, %

11.5%

10.6%

21.4%

0.1%


Revenue, RUB mln.

Group

Distribution

Retail Sales

Production

Eliminations

9M 2012

87,255

76,225

11,625

4,196

-4,791

9M 2011

74,794

65,749

9,948

3,758

-4,661

Change, 2012/2011, %

16.7%

15.9%

16.9%

11.7%


In Q3-2012, consolidated revenue of the Group* increased by 11.5% y-o-y to RUB 30,411 mln.

In 9M 2012, the Group's consolidated revenue increased by 16.7% y-o-y to RUB 87,255 mln.

The Group's revenue growth in 9M 2012 was driven by all business segments, each showing an uptrend.

Distribution Segment:

Key company of the segment is CV Protek.

Distribution Segment Operating Highlights:

Revenue, RUB mln.

Q3-2012

26,840

Q3-2011

24,273

Change, 2012/2011, %

10.6%

Revenue, RUB mln.

9M 2012

76,225

9M 2011

65,749

Change, 2012/2011, %

15.9%

In Q3-2012, revenue of the Distribution Segment increased by 10.6% y-o-y to RUB 26,840 mln.

In 9M 2012, revenue of the Distribution Segment increased by 15.9% y-o-y to RUB 76,225 mln. The Distribution Segment makes up 83% of the Group's total revenue**.

Retail Sales Segment

Key company of the segment is Rigla pharmacy chain.

The total number of retail outlets was 764 as at 30 September 2012.

In Q3-2012, 28 pharmacies were organically opened and 15 pharmacies were closed.

In 9M 2012, 96 pharmacies were organically opened and 27 pharmacies were closed.

Retail Sales Segment Operating Highlights:

Revenue,
RUB mln.

Traffic, thousands

Q3-2012

3,883

12,816

Q3-2011

3,199

11,828

Change, 2012/2011, %

21.4%

8.4%

Revenue,
RUB mln.

Traffic, thousands

9M 2012

11,625

38,362

9M 2011

9,948

36,299

Change, 2012/2011, %

16.9%

5.7%

In Q3-2012, revenue of the Retail Sales Segment increased by 21.4% to RUB 3,883 mln.

In 9M 2012, revenue of the Retail Sales Segment increased by 16.9% to RUB 11,625 mln. The Retail Sales accounted for 13% of the Group's total revenue**.

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

As at 30 September 2012, there were 442 Like-for-Like pharmacies in the Retail Sales Segment.

L-f-L Retail Sales Segment Operating Highlights:

L-f-L revenue change, %

Traffic change, %

Average ticket change, %

Q3-2012 /Q3-2011

11.1%

-1.9%

13.3%

9M 2012/ 9M 2011

8.0%

-3.5%

11.9%

Over Q3-2012, the revenue of L-f-L pharmacies increased by 11.1%.

Over 9M 2012, the revenue of L-f-L pharmacies increased by 8.0%.

ЃgBud Zdorov! discount pharmacy chain expansion:

As at 30 September 2012, Rigla's Bud Zdorov! (Bless You!) discount brand was represented in 171 pharmacies (compared to 154 pharmacies as at 30 June 2012).

Over Q3-2012, the revenue of Bud Zdorov! pharmacies increased by 24.5% y-o-y, traffic was up 10.8%.

Private label development:

As at 30 September 2012, the private label product line included 457 items compared to 367 items as at 30 June 2012, representing an increase of 25% q-o-q.

As at 30 September 2012, private label products comprised 3.1% and 7.1% of the segment's total revenue and gross profit, respectively, with the Company continuing its efforts to expand the number of parapharmaceutical private labels.

Production Segment

Key company of the segment is Sotex.

Production Segment Operating Highlights:

Revenue, RUB mln.

Volume, mln. packages

Own brands in revenue, %

Q3-2012

1,275

4,47

32%

Q3-2011

1,275

4,56

22%

Change, 2012/2011, %

0.1%

-2.0%



Revenue, RUB mln.

Volume, mln. packages

Own brands in revenue, %

9M 2012

4,196

15,14

37%

9M 2011

3,758

11,30

22%

Change, 2012/2011, %

11.7%

34.0%


In Q3-2012, the Production Segment's revenue increased slightly, i.e. by 0.1% y-o-y to RUB 1,275 mln.

In 9M 2012, revenue of the Production Segment increased by 11.7% to RUB 4,196 mln. The segment makes up 5% of the Group's total revenue**.

In Q3-2012, revenue from own brands increased by 49% y-o-y from RUB 274 mln. to RUB 409 mln. 

Over 9M 2012, the Group expanded the number of own brands, launching Chondrogard and Nemulex, and adding new dosages of established brands. In the reporting period, the own brand product line included 41 items, compared to 35 items in 9M 2011.

Over 9M 2012, the Production Segment's revenue from own brands increased by 89% y-o-y to RUB 1,530 mln. from RUB 808 mln.

Vadim Muzyayev, President of Protek Group: We like the results of all business segments and the Group as a whole. Nearly all the segments outpaced the market in their revenue growth.
The Distribution Segment has demonstrated a steady growth in sales over the reporting periods. The Company's commercial customer base has been expanding to add almost 500 commercial customers over the 9 months, evidencing the strength of our position in this core strategic market. 
We achieved an impressive organic growth in the Retail Sales segment, having opened 96 pharmacies during 9 months, which is the highest expansion rate versus the previous years. Like-for-Like pharmacies showed a strong average ticket uptrend, offsetting a decrease in traffic. Rigla is strategically focused on multi-format pharmacies and private labels.
The low revenue growth in the Production Segment in Q3-2012 was due to discontinued sales of the licences generic Baralgin. However, in the 9 months span, the Company has seen above-market revenue growth. This was largely driven by increased sales of own brands, the own brand share in revenue up to 37% from 22% y-o-y. Two new products, Chondrogard and Nemulex, were introduced during the period showing their high revenue potential just after launch.
We expect a strong revenue growth across all the segments in the Q4 high season to promote leadership across the market segments. 

* Preliminary results based on Q3-2012 and 9M 2012 unaudited management accounts.
** Calculated as the share of each segment in the total revenue (excluding segment allocations and eliminations).
*** Like-for-Like data on the pharmacies opened or acquired over the 24 months immediately preceding the reporting period and not closed during the reporting period.