Stada Falls as Earnings Miss Estimates on German Weakness

Stada Arzneimittel AG 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 5.5 percent in Frankfurt, the biggest decline since Aug. 2 last year, to close at 37.88 euros.

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.

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