Today, on 30 May, the JSC Grindeks submitted the non-audited consolidated financial statements for the first quarter of 2014 to “Nasdaq OMX Riga”. Non-audited financial results indicate that the Group’s turnover amounted to Turnover of the Group in the first quarter of 2014 was 18.81 million euros and has decreased by 5.4 million euros or 22% in comparison to the first quarter of 2013.
While the Group’s net profit, attributable to shareholders of the parent company, was 0.5 million euros in the first quarter of 2014 and has decreased by 2.6 million euros or 84% in comparison to the first quarter of 2013. Gross profit margin in the first quarter of 2014 was 62% while net profit margin was 3%. In the first quarter of 2014 the Group’s production was exported to 51 countries worldwide, a total of 17.8 million euros which is 4.8 million euros or 21% less than in the first quarter of 2013.
Wholesale warehouse balance optimization and national currency devaluation risk management turns out to being a significant tendency in the main final dosage form markets of Grindeks. These are the main reasons that affected reduction in turnover in the first quarter of 2014. While the decrease in net profit was due to an increased investment in research and development in two strategic projects. In cooperation with scientists of Latvia the project of inhibitor of cardioprotective agent – GBB hydroxyls with an original structure – chemical and preclinical pharmacological efficiency studies, which is an important step in creating a new medical product. The other project is registration of a drug Mildronate® in China, where the 3rd phase of clinical trial for this medication is now being held.
Sales volume of the final dosage forms of Grindeks in the first quarter of 2014 was 16.1 million euros and has decreased by 5.2 million euros or 24% in comparison to the first quarter of 2013. The main final dosage forms markets are Russia, other CIS countries, Georgia and the Baltic States. The sales amount in Russia, other CIS countries and Georgia reached 13.3 million euros in the first quarter of 2014, which is by 4.7 million euros or 26% less than in the first quarter of 2013. In its turn, turnover of the final dosage forms in the Baltic States and other European countries was 2.8 million euros, which is by 0.5 million euros or 15% less than in the first quarter of 2013.
In the first quarter of 2014 significant sales increase has been achieved in Ukraine (+80%), Uzbekistan (+39%), Belarus (+35%), Armenia (+28%) and Turkmenistan (+23%) in comparison to the first quarter of 2013.
Despite the significant increase in sales in Ukraine (which is one of the main markets of Grindeks) in the first quarter of 2014, Grindeks is evaluating situation in this country cautiously. Grindeks forecasts that sales in Russia will gradually return to its previous volume. Projections are based on strong leadership positions of the main original product Mildronate® as evidenced by the IMS market data: in the first quarter of 2014 market share of Mildronate® in its segment accounted for 86% (packages) and 91% (euro).
In the first quarter of 2014, sales of the active pharmaceutical ingredients reached 2.6 million euros, which is by 0.1 million euros or 4% less than in the first quarter of 2013. Main markets of Grindeks active pharmaceutical ingredients are the EU countries, USA and Japan. The most required active pharmaceutical ingredients of Grindeks are Zopiclone, Oxytocic, Ftorafur (Tegafur) and Droperidol.
JSC Grindeks Chairman of the Board Juris Bundulis: “Now more than ever we pay attention to the company’s sustainable operation – large-scale research and development projects are carried out, operations of the organisation are restructured by strengthening effectiveness of sales and marketing, as well as new market opportunities are searched for. Performance indicators at the beginning of the year are not encouraging yet they are motivating to continue what is initiated deliberatively. Competition is fierce; furthermore we are working in sensitive markets in the area of final dosage forms. I am confident that we will be able to adapt to the market specificity by using our knowledge and experience.”
To improve efficiency of Grindeks operations, structural changes are carried out in the company. The main objective of these changes is to make the company more flexible, more capable to react faster to market changes and increase competitiveness. The new business model has already improved the sales and marketing function and efficiency.
JSC Grindeks financial results for the first quarter of 2014. (331 KB)