Russian exports boost Gedeon Richter

Gedeon Richter, the Hungarian pharmaceutical company, on Tuesday reported fourth-quarter net income of Ft10.4bn ($57.67m), up 37 per cent on 2006 and ahead of market expectations. Figures were helped by a surge in exports to the European Union and Russia, and financial results.

However, in spite of the strong autumn performance, net income for last year slumped 35 per cent, to Ft33.5bn as the company struggled to swallow higher marketing and development costs, negative exchange rate movements and tough government regulations on the key domestic market.

Exchange rate changes meant the results in dollar terms looked significantly better.

Erik Bogsch, chief executive, said he was saddened that “unfavourable” government measures to curb drug costs in the Hungarian state health system, along with additional taxes to rectify the budget deficit, resulted in domestic sales tumbling 13.4 per cent in 2007.

Mr Bogsch said he expected Hungarian sales to be squeezed a further 5 per cent this year, mainly due to enforced price cutting, but that the fall-off in sales volumes had “finally come to an end”.

Exports rose 14 per cent to Ft176.3bn, helped by an exceptionally strong performance to EU countries, where sales rose 31 per cent to Ft75.8bn.

Sales in the EU and CIS are expected to continue at between 10 and 15 per cent this year, helped by the improving stability and economic performance of the latter, he said.

“This result last year was fine considering the conditions, like the strong forint, and lack of milestone payment ... in 2006. It was a tough situation and this year could be better, with sales rising on the major [export] fronts, and further pressure on prices limited,” said Barbara Janosi, equity analyst with KBC Securities in Budapest.

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