Prim’s Rodriguez Says Lower Prices, Flat Sales Hurt 2010 Profit

Prim SA, Spain’s only publicly traded supplier of medical products, probably had a drop of about 10 percent in operating profit last year as prices fell and sales were flat, Carlos Rodriguez, a board member, said.

Earnings before interest, taxes, depreciation and amortization “may fall even further in 2011,” Rodriguez, Prim’s secretary general, said Jan. 24 in a phone interview. “We’ll still post a profit but I don’t expect growth to resume until 2012.”

Prim, whose main customers are Spanish regional governments, may report 2010 sales similar to the prior year’s 95.5 million euros ($131 million), Rodriguez estimated. Lower prices meant a smaller profit for each unit, he said. Regional governments need to continue spending on health care even as budgets remain under tight control.

“We’re a privileged sector but times are tough,” Rodriguez said.

Pedro Prim started the company in 1870 as a maker of orthopedic shoes in Navarra, northern Spain. Prim, now based in Madrid, posted net income of 6.85 million euros on sales of 69.7 million euros in last year’s first nine months.

Rodriguez said he expects Prim will not clearly surpass 100 million euros in sales until 2012. About 90 percent of sales are in Spain, with the most of the rest from exports to other Organization for Economic Cooperation & Development countries.

Fewer Offers

Over the past few years, Prim declined offers to sell assets as “they were strategic.” These offers have tailed off in the last few months as the financial and economic crisis discourages bids. The company won’t divest or buy any assets in the short term, Rodriguez said.

The most significant potential risks for the Madrid-based company may come from payment defaults by regional administrations. “In 2010 they have paid very badly, but we are in a strong position as our debt remains very low,” Rodriguez said.

As the company will remain profitable, it may keep its dividend unchanged from last year’s payout of 19 euro cents a share, Rodriguez said.

To contact the reporter on this story: Manuel Baigorri in Madrid at mbaigorri@bloomberg.net

To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net

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