Italy's Recordati has reported flat turnover but a rise in operating income in 2004, while its pharmaceutical chemicals business managed to return to profit, reports Phil Taylor.
The company's total turnover rose just 0.2 per cent to €488 million, with branded and generic pharmaceutical sales growing 3.5 per cent to €439m. Pharmaceutical chemicals sales, on the other hand, declined 22 per cent to €49m on the back of restructuring and exchange rate impacts, with the share of total turnover for this division dropping to 10 from 13 per cent.
On a somewhat more positive note, Recordati managed to improved the financial performance of the pharmachem business with a return to a modest €2m operating profit, compared to a €3.5m loss in 2003, as the company divested product lines that were no longer profitable.
In 2003, Recordati announced its intention to sell off its pharmachem business, but it had to retreat from this plan as the adverse operating environment affecting the broader chemicals sector in 2004 made it difficult to realise its objectives regarding the price of the unit. However, the company's strategy remains a divestment of all activities that are outside its core focus of developing and marketing its own medicines.
The company said it is actively seeking acquisitions to boost its pharmaceuticals business, and there is now speculation that with pharmachem back in the black and the European chemicals industry showing signs of recovery, Recordati may renew efforts to find a buyer.
Overall, the company posted an 11.6 per cent increase in its operating income at €90m, while pretax profit leapt 127 per cent to €87m, due primarily to the extraordinary write-down of pharmaceutical chemicals assets booked in 2003. The firm's financial structure was boosted not only by the divestment of French subsidiary Sophartex, a French subsidiary specialising in the contract manufacture of finished pharmaceutical dosage forms, and also by the sale of an office building in Paris.
Growth in pharmaceuticals was attributed to the success of Recordati's cardiovascular drug Zanidip (lercanidipine), turnover of which increased 25 per cent to €115m.
Meanwhile, group sales for the first two months of 2005, including the recently-acquired over-the-counter (OTC) medicines business of German firm Merckle, grew 15 per cent. Excluding the latter's contribution, revenues increased 12 per cent.
Commenting on the figures, chief executive Giovanni Recordati said: "our new targets for this year are to achieve sales of over €550m, operating income of over €100m and net income of more than €60m."