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Richter Slumps to One-Month Low on Profit Miss, Sales Forecast

Gedeon Richter Nyrt., Hungary’s largest drugmaker, plunged to the lowest level in almost a month after fourth-quarter profit missed analysts’ estimates and the company said revenue may decline this year.

The shares fell as much as 4.1 percent and traded 3.5 percent lower at 4,368 forint as of 12:13 p.m. in Budapest, valuing the company at 814 billion forint ($3.6 billion). The stock has lost 0.7 percent this year after climbing 21 percent in 2013.

Net income slumped 61 percent to 4.8 billion forint in the fourth quarter, missing the 12 billion-forint mean estimate in a Bloomberg survey of five analysts. Sales grew 8.9 percent to 91 billion forint and the company posted financial losses of 1.7 billion forint and a further 1.5 billion-forint writedown after terminating a research project, according to its regulatory statement today.

“Richter had a very weak quarter, with only revenues meeting estimates,” Endre Kosa, a Budapest-based analyst at KBC Groep NV (KBC)’s brokerage said by phone today. Costs may continue to weigh on profitability, he said.

Richter, which sells most of its products abroad, expects its revenue to shrink in 2014, with the scope of the decline depending on foreign exchange rate moves, Chief Executive Officer Erik Bogsch told reporters in Budapest today.

Investors expect revenue to increase this year and in 2015 and the company’s guidance is “a setback,” KBC’s Kosa said. Richter tends to be conservative with forecasts and investors may see an upward revision later this year, he said.

To contact the reporters on this story: Marton Eder in Budapest at meder4@bloomberg.net; Edith Balazs in Budapest at ebalazs1@bloomberg.net

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net

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