Celesio First-Half Profit Rises After Writing Down Units

Celesio AG, a German drug wholesaler, said first-half operating profit rose after writing down units sold and those still to be disposed and stuck to its forecast for 2012 after adjusting year-ago figures.

First-half operating profit rose to 283.5 million euros ($351 million) from 257.5 million euros a year earlier, the Stuttgart, Germany-based company said in an e-mailed statement today. Celesio defines operating profit as earnings before interest, taxes, depreciation and amortization excluding restructuring charges and adjusted for revaluation and tax effects. Sales increased to 11.25 billion euros from 11.06 billion euros.

Celesio reiterated a forecast that Ebitda this year, excluding one-time items, will at least match the 2011 level, which was restated as 549.7 million euros. Prior to the adjustments, Celesio reported profit Ebitda last year of 578.3 million euros.

“The underlying business is doing very well compared with the rest of the health-care industry,” said Martin Brunninger, an analyst with Nomura International Plc. “It’s all about the core business, and I think that’s been blurred over the last few years.”

Shares Gain

Celesio rose 1.7 percent to close at 14.39 euros in Frankfurt, giving the company a market value of 2.45 billion euros.

The writedowns were necessary and the forecast is still conservative given the first-half earnings growth rate, Brunninger said. He forecasts Ebitda this year will be 584 million euros.

The company booked a 228 million-euro charge for the sale of the Movianto logistics and Pharmexx customer support divisions and writedowns on planned divestments of mail-order pharmacy DocMorris and the Irish wholesale business. Celesio also said it will sell its Czech wholesale and retail business to Penta Investments for 84.5 million euros.

The net loss for the period widened to 183.9 million euros compared with a loss of 30.2 million euros a year earlier. The company is selling businesses with low growth prospects and boosting investment in emerging economies, including Latin America and the Middle East, and increasing its focus on the wholesale and retail pharmaceutical market. Celesio agreed in July to sell Movianto to U.S. medical-supplies distributor Owens & Minor Inc. and Pharmexx to United Drug Plc.

Earlier Sales

“The sale of Movianto, Pharmexx and the activities in the Czech Republic all happened earlier than expected,” Chief Executive Officer Markus Pinger said in the statement. “We can now focus on accelerating growth in our core business.”

The 35 million-euro disposal of Pharmexx is targeted for completion on Aug. 31, pending regulatory approval, according to Celesio. The company aims to sell DocMorris, whose value was reduced to 40 million euros as part of the writedowns, and the Irish wholesale business by the end of the year, the company said today.

Adjusted net income rose to 106 million euros from 88.7 million euros, the company said.

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