Stada Shares Fall as Earnings Miss Estimates on German Weakness

Stada Arzneimittel AG (SAZ) shares fell the most in 15 months as lagging profit in the generic-drug maker’s German home market pushed earnings below analysts’ estimates.

Stada’s third-quarter net income, adjusted for some one-time effects, fell about 16 percent to 30.2 million euros ($40.6 million), the Bad Vilbel-based company said today. That missed the 39.6 million-euro average estimate of five analysts surveyed by Bloomberg.

Stada partly blamed the decline on a tax rule that limits interest deductions to 30 percent of the earnings before interest, taxes, depreciation and amortization a company reports in Germany. Stada said its taxes rose as its German profits dropped. Meanwhile, faster-growing markets in Eastern Europe couldn’t offset the domestic slowdown Stada faces, said James Vane-Tempest, a London-based analyst for Jefferies.

“The German market in particular was very weak,” Vane-Tempest wrote in a note to investors, calling the results “light across the board.” He has an underperform rating on the shares of Stada, Germany’s biggest publicly traded generic-drug maker.

The shares fell as much as 6.9 percent in Frankfurt, the biggest intraday decline since Aug. 2 last year, and were trading 6.6 percent lower at 37.45 euros as of 11:57 a.m. local time.

Stada, which started selling generic Viagra in June, kept its guidance for this year and next, saying that adjusted Ebitda will rise in the high single-digit percent range both years. In 2014, the company forecast revenue of about 2.15 billion euros, and a minimum of adjusted Ebitda of about 430 million euros and adjusted net income of about 215 million euros.

Stada didn’t report third-quarter adjusted profit. Spokesman Patrick Meschenmoser confirmed a number calculated by subtracting half-year results from nine-month results reported today. Sales rose 3.4 percent to 462.4 million euros with revenue in Germany down 16 percent.

The company has scheduled a conference call with journalists at noon Frankfurt time today and a call with investors at 2 p.m.

To contact the reporter on this story: Naomi Kresge in Berlin at nkresge@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net

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