Richter Keeps Outlook as Chinese Gain Lifts First-Quarter

  • Better-than-expected performance driven by one-time China item
  • Too early to change outlook based on first three months: CEO

Richter Gedeon Nyrt., Hungary’s largest drugmaker, kept its guidance for the year after a one-off item related to its Chinese subsidiary boosted results in the first quarter.

The company reported net income of 12.2 billion forint ($44.6 million) in the first quarter of 2016, compared with 15 billion forint a year earlier. Revenue rose 1.9 percent to 89.3 billion forint as higher sales in Romania, Russia, China and Poland offset weaker results in the U.S., the euro zone and other parts of the former Soviet Union. A positive impact related to the increase in ownership of the Chinese subsidiary, Gedeon Richter Rxmidas, lifted the bottom line, Chief Executive Officer Erik Bogsch said Thursday.

"One-off items helped the operating result and net income exceed consensus," Monika Kiss, head of research at Equilor said by e-mail. The Budapest-based brokerage is keeping its "accumulate" recommendation for the stock with a 6,100 forint target price, she said.

According to the guidance announced after the 2015 results, the company expects consolidated revenue to drop 5 percent in euro terms this year. That will be driven by a decline in Ukraine, the U.S. and in the eastern member states of the European Union. Sales from the gynecological drug Esmya will probably rise to 65 million euro ($74 million) from 50 million euro in 2015, while sales to China are forecast to rise by about 10 million euro to 65 million euro.

"While there is some differentiation in sales among markets, those don’t warrant a change in the outlook as yet," Bogsch said. "It would be too early to modify it based on the first three months."

Richter’s shares traded 0.8 percent higher at 5,395 forint by 2:47 p.m. in Budapest, after falling as much as 1.3 percent, and trimming this year’s decline to 1.9 percent.

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