Krka Announces a 41% Rise in Net Profit, and New 5-Year Growth Strategy

By , 22 Mar 2018, 15:49 PM Business
Krka Announces a 41% Rise in Net Profit, and New 5-Year Growth Strategy Company website

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Net profit now 153.6m EUR, on sales of 1.27bn.  

Krka Announces a 41% Rise in Net Profit, and New 5-Year Growth Strategy


STA, March 22, 2018 – Pharma company Krka saw group net profit increase 41% in 2017 to EUR 152.6m, on sales that rose 8% to EUR 1.27bn, a new record for the company, show unaudited results released on Thursday.

Group operating profit (EBIT) rose 62% to EUR 198.7m and profit before tax, depreciation and amortisation (EBITDA) was up 34% to EUR 306.6m.

The core company posted sales of EUR 1.2bn, up almost 12%, whereas net profit rose nearly 50% to EUR 153.7m.

Krka generated 93% of sales abroad, with its largest region Eastern Europe, which accounts for almost a third of overall sales, growing at a rate of 17%. Sales recovered in particular in Russia, where they grew by a fifth.

In Central Europe, which contributed 24% to overall revenue, sales figures rose by 6%.

In Western Europe, which accounts for 22.6% of Krka sales, revenue was almost flat, mostly due to a 13% decline in Germany. Sales in Southeast Europe were up by 6%.

Prescription drugs remain the strongest segment, contributing almost 83% to the total sales.

Krka chairman Jože Colarič told the press in Novo Mesto that the rise in sales and profit was primarily a result of a growth of sales of more profitable products, and good cost management.

This year, the group plans to post sales of EUR 1.3bn and net profit of EUR 153m, he said, adding that the management would look to exceed these figures as the business climate was favourable.

Krka plans to spend EUR 135m for investments this year, primarily for expanding and modernising production and infrastructure. The plan is to increase the number of employees by 2% to 11,200 by the end of 2018.

In a separate report, the STA also noted that the company plans to record at least 5% annual growth in volume sales and sales revenue according to a new strategy until 2022, which Krka’s chairman Jože Colarič presented on Thursday.

With carefully planned investments and an increased scope of contract manufacturing, the Krka group will drive down the value of investments to an average of EUR 136m a year in the period.

In addition to organic growth, it intends to expand by means of acquisitions and joint ventures in case of commercially appealing targets. The primary objectives are to acquire new products and enter new markets, the strategy says.

Krka will continue launching products on selected markets, and it will strengthen the pharmaceutical and chemical industry and in this respect expand its range of prescription pharmaceuticals.

Innovative generic products will be introduced in key therapeutic areas, such as fixed-dose combinations of two or three substances, pharmaceutical forms, and new delivery systems.

Krka will be also putting emphasis on drugs for treatment of autoimmune diseases and diabetes, non-prescription products and animal health products, particularly products for pets.

The share of expenditure for research and development will account for up to 10% of sales in the strategic

Krka will focus on European markets, which already account for the bulk of its sales, but it is also eyeing China and the markets of Central Asia.

In China, "major opportunities are arising in view of the increasing use of modern generic medicines and changes in the regulatory environment," the company said.

Krka will pursue a stable dividend policy, with at least 50% of the net profit of the majority owners being allocated to dividend payments, according to Colarič.

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