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Celesio Repeats Forecast as Drug Wholesaler Sells Units

Celesio AG reiterated it expects profit this year will at least match 2011 as Europe’s largest drug wholesaler sells units and expands in emerging markets.

First-quarter profit excluding restructuring costs rose 4.7 percent to 53 million euros ($68.3 million) from 50.6 million euros a year earlier, the Stuttgart, Germany-based company said in a statement today. Profit matched the 53 million-euro average of two analyst estimates compiled by Bloomberg.

Celesio is in the process of selling its mail-order pharmacy business DocMorris, as well as Movianto, which offers contract logistics services to drugmakers, and Pharmexx, which provides sales and marketing support. Chief Executive Officer Markus Pinger, who took over in August, plans to overhaul the company and increase investment in emerging markets, including Latin America and the Middle East.

“This year we will build upon the strategic realignment, which we started in 2011,” Pinger said in the statement. “We consider the current year 2012 to be a year of transition.”

Celesio fell 3.4 percent to 12.81 euros in Frankfurt, giving it a market value of 2.18 billion euros.

Earnings before interest, taxes, depreciation and amortization, excluding one-time effects from a cost-saving program, rose 5.1 percent to 139.9 million euros, the company said, confirming a May 8 statement. Revenue increased about 2.5 percent to 5.64 billion euros, the company said previously.


The company reported a non-cash impairment charge of 45 million euros from the revaluation of Pharmexx. The net loss attributable to shareholders was 5.4 million euros compared with a profit of 53.3 million euros a year earlier.

Ebitda excluding one-time effects from the cost-saving plan will be at least at last year’s level, the company said.

“Government cost-cutting and high levels of competition are more of a concern than the benefits from euro weakness and small-scale M&A,” Mark Belsey, an analyst with WestLB AG, said in an e-mail today. He noted that while reported earnings were down substantially, the adjusted numbers were positive.

Celesio has already received “sufficiently concrete” bids for its Movianto and Pharmexx units as well as its Czech pharmacy business, the wholesaler said in today’s statement. This led to the writedown at Pharmexx. The company expects the sale of the units and DocMorris to be completed this year.

Panpharma Purchase

Celesio bought the remainder of Brazilian drug wholesaler Panpharma SA for about 260 million euros, the company said April 26.

The wholesaler said it is considering increasing the dividend this year or in coming years.

The company could be a takeover candidate given the stock is trading at a 20 percent discount to its peer group, Edouard Aubery and Konrad Lieder, analysts with Equinet Bank AG, said in a note to investors May 10. The wholesaler will probably meet its forecast and benefit from restructuring in the second half of the year, the analysts said. A bid of 16.70 euros a share would be a fair value for the company, they said.

U.S. wholesalers are unlikely to buy into the European market because of a lack of synergies, and antitrust issues will restrict an acquisition by another European wholesaler or retail chain, Belsey said today.

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