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In 2019, Olainfarm Group successfully started its transformation, which has already yielded significant results

on May 6, 2020
  • In 2019, Group’s sales reached EUR 137 219 thousand , which is an increase by 10% or EUR 12 963 thousand.
  • Group’s audited net profit reached EUR 23 628 thousand, which is the largest profit amount in history.
  • For 2019 the management proposed a dividend of EUR 0.32 per share.
  • In 2020, Group forecasts a revenue of EUR 135 500 thousand and net profit of EUR 14 200 thousand.

The Group’s main achievements in 2019 were the following:

  • Secured profitability of the entire Group, focusing on identifying growth opportunities;
  • Maintained the competitive position of our products in the key markets;
  • Strengthened the product portfolio through new product launches;
  • DIversified and enhancing JSC Olainfarm presence in various markets through exporting products;
  • Optimized financial control and cost containment measures;
  • Optimized production processes and cost containment measures put in place;
  • Expanded the management board by added two new members bringing international pharma experience to the Group.

During the entire 2019 the Group sales reached EUR 137 219 thousand, which is an increase by 10% or EUR 12 963 thousand compared to 2018. Gross profit, in turn, was EUR 84 807 thousand which shows an increase by 13% or EUR 9 951 thousand since 2018. Gross profit margin improved from 60% in 2018 to 62% in 2019.

Parent company sales in 2019 increased by 12% and reached EUR 104 363 thousand compared to the previous year. Gross profit grew by 17% and amounted to EUR 69 453 thousand. Parent company’s gross profit margin rose from 64% in 2018 to 67% in 2019.

The total annual revenue of the Group in 2019 exceeded planned sales figures (EUR 133 343  thousand) for the entire 2019 by 2.9% or EUR 3 876 thousand. Parent company’s revenue beat the forecasted (EUR 98 636 thousand) by 5.8% or EUR 5 727 thousand.

The Group’s main markets in 2019 were Russia with a 32% share (+2pp), Latvia with 28% (-1pp), Belarus with 11% (unchanged), the Ukraine with 8% (-1pp), Central Asian and EU countries have an 8% share (unchanged), Other countries with 3% (-1pp) and Caucasian countries with 2% (unchanged).

The main business segment is final dosage forms that are manufactured by the Parent company in Olaine. In 2019, pharmaceutical products worth EUR 80 993 thousand were sold, which is an increase by 14% or EUR 10 046 thousand if compared to 2018. This segment’s share in the Group’s total revenue in 2019 rose by 2 p.p. to 59%.

Throughout 2019, sales of JSC Olainfarm main final dosage forms continued to increase. The share of the best selling product Noofen increased to 20% that is by one percentage point more than the year before. The share of the three largest products: Noofen, Neiromidin and Furamag/Furasol comprised 56% that is also one percentage point higher than the year before.

Within the Group, Latvijas aptieka Ltd manages and develops pharmacies in Latvia where the Pharmacy segment in 2019 generated a revenue increase by 7% compared to 2018 and reached EUR 25 427 thousand. The company evaluates market trends and performance results of each pharmacy. There were 68 pharmacies at the end of 2019. This segment’s share in the Group’s total revenue during 2019 did not change and was 19%.

Group’s company Tonus Elast Ltd manufactures a wide range of compression materials and sells products in Latvia and abroad. Revenue of this segment in 2019 was EUR 8 794 thousand that is 7% or EUR 712 thousand less than the year before. This segment’s share in the Group’s total revenue in 2019 declined by 2 p.p. to 6%.

Within the Group, the Parent company JSC Olainfarm manages the wholesale of medical products as it has a medical wholesale license, which allows it to purchase products from other manufacturers and to deliver them to Latvijas aptieka Ltd as well as other cooperation partners. Revenue of this segment from external customers in 2019 was EUR 5 382 thousand, which is a decline by 2% or EUR 104 thousand. This segment’s share in the Group’s total revenue during 2019 did not change and was 4%.

In addition to final dosage forms, the Parent company manufactures chemical components that are sold to other pharmaceutical companies covering a wide geographical area. The segment’s income in 2019 was 16% higher than in 2018 and reached EUR 5 124 thousand. This segment’s share in the Group’s total revenue during 2019 did not change and was 4%.

The last segment combines Silvanols, Diamed and Olainmed medical facilities, the Belarussian manufacturing company Biotest and others, generating EUR 11 499 thousand in revenue in 2019, which is 14% more than in 2018. This segment’s share in the Group’s total revenue during 2019 did not change and was 8%.

Group’s EBITDA figure in 2019 was EUR 33 499 thousand, which is by 66% or EUR 13 271 thousand more than the results of 2018. The Parent company’s EBITDA in 2019 improved by 91% and reached EUR 29 256 thousand. In 2019, EBITDA margin of the Group and the Parent company was 24.4% and 28.0%, respectively.

Group’s net profit in 2019 was EUR 23 628 thousand, which is the largest net profit amount in the history of the Group. The profit increased by 120% or EUR 12 897 thousand in comparison to 2018. The Group’s net profit margin in 2019 was 17.2%, whereby in 2018 the ratio was 8.6%.

The Parent company’s net profit in 2019 was EUR 22 239 thousand, which is by EUR 13 353 thousand or 150% more than in 2018. The Parent company’s net profit margin in 2019 was 21.3%, whereby in 2018 the ratio was 9.6%.

The Group’s net profit target for 2019 initially was EUR 10 million but in May the management revised it to EUR 12.7 million. For the Parent company, the initial forecast of net profit was EUR 8.8 million and subsequently revised to EUR 11.5 million. Due to a number of positive events the actual results of the Group exceeded the Group’s revised target by 86% and the Parent’s target by 93%.

In 2019, the Parent company approved a Dividend policy. For 2019, the Management Board will recommend dividend payout of 20.27% of the Parent company’s audited net profit in the total amount of EUR 4 507 224.96 or EUR 0.32 per share.

According to the previous plan a set of pre-clinical and clinical trials was conducted in 2019. Throughout 2019, five phase 1 clinical trials (pharma kinetics and bioavailability) were started with the completion of trial planning, drafting of required documentation and issue of permits. Trials are set to close and final reports to be received in the 1st to 3rd quarters, 2020.

At the same time, in 2019, a planning and preparation phase took place for phase 3 clinical trials for two final dosage forms with a plan to start trials in 2020. Implementation of clinical trials for peripheral nervous system diseases is planned for the 1st quarter, 2020.

During 2020, substantial investments are arranged for the planning of clinical trials in order to start one phase 1 clinical trial and three phase 3 clinical trials in the 4th quarter of 2020 – 1st quarter of 2021.

Future oriented, in 2020, the Group will further build on the strategic directions for sustainable growth by focusing on innovation and leveraging synergies across the group. Second growth lever is to adapt the current and future portfolio and geographical scope to mid-term and long-term opportunities. At the same time, the Group is securing business by opening subsidiaries or representative offices in the main markets with the objective to work closer to the customer and key stakeholders, to have better control over promotional efforts and performances, and to anticipate for future growth.

For 2020, the Group estimates its revenue to be EUR 135.5 million and a net profit of EUR 14.3 million as well as EPS of 1 euro. JSC Olainfarm forecasta a revenue of EUR 97.3 million  and a net profit of EUR 13.4 million.

Condensed Consolidated Statement of  Financial Position

  Group Parent company
  31.12.2019        31.12.2018               31.12.2019        31.12.2018
  EUR ‘000 EUR ‘000 EUR ‘000 EUR ‘000
    ASSETS  
NON-CURRENT ASSETS  
Intangible assets   38 422   36 619   4 181   1 977
Property, plant and equipment   42 442   43 697   36 327   37 380
Right-of-use assets   7 069   –   2 440   –
Investment property   253   3 492   253   289
Other long-term investments   782   983   43 752   46 967
TOTAL NON-CURRENT ASSETS   88 968   84 791   86 953   86 613
CURRENT ASSETS  
Inventories   28 247   25 794   19 765   17 945
Receivables   36 225   34 637   34 506   32 040
Cash   15 230   2 689   12 965   1 545
TOTAL CURRENT ASSETS   79 702   63 120   67 236   51 530
TOTAL ASSETS   168 670   147 911   154 189   138 143
 
  EQUITY AND LIABILITIES  
EQUITY  
Share capital   19 719   19 719   19 719   19 719
Share premium   2 504   2 504   2 504   2 504
Reserves   (12)   (224)   40   40
Retained earnings   105 298   83 079   99 657   78 827
TOTAL EQUITY   127 509   105 078   121 920   101 090
LIABILITIES  
Non-current liabilities  
Borrowings and lease liabilities   12 177   1 793   8 308   1 525
Deferred income   3 194   2 878   3 179   2 852
Total Non-Current Liabilities   15 371   4 671   11 487   4 377
Current liabilities  
Borrowings and lease liabilities   9 568   23 236   8 299   21 696
Trade payables and other liabilities   15 727   14 540   12 007   10 614
Deferred income   495   386   476   366
Total Current Liabilities   25 790   38 162   20 782   32 676
TOTAL LIABILITIES   41 161   42 833   32 269   37 053
TOTAL EQUITY AND LIABILITIES   168 670   147 911   154 189   138 143

Consolidated statement of comprehensive income

  Group Parent company
  2019 2018 2019 2018
  EUR ‘000        EUR ‘000                 EUR ‘000        EUR ‘000
Revenue   137 219   124 256   104 363   93 018
Cost of goods sold   (52 412)   (49 400)   (34 910)   (33 453)
Gross Profit   84 807   74 856   69 453   59 565
Selling expense   (30 188)   (37 291)   (20 936)   (28 449)
Administrative expense   (26 750)   (24 427)   (22 968)   (20 708)
Other operating income   2 363   2 559   2 479   1 524
Other operating expense   (7 684)   (1 726)   (7 495)   (1 278)
Share of profit of an associate   81   106   –   –
Dividend income from subsidiaries and associates   –   –   754   1 004
Financial income   2 260   76   2 065   126
Financial expense   (924)   (2 788)   (792)   (2 552)
Profit Before Tax   23 965   11 365   22 560   9 232
Corporate income tax   (387)   (630)   (321)   (346)
Deferred corporate income tax   50   (4)   –   –
PROFIT FOR THE REPORTING PERIOD   23 628   10 731   22 239   8 886
Other comprehensive income for the reporting period, net of tax   212   (150)   –   –
Total comprehensive income for the reporting period, net of tax   23 840   10 581   22 239   8 886
Total comprehensive income attributable to:  
The equity holders of the Parent Company   23 840   10 581   22 239   8 886
Non-controlling interests   –   –   –   –
 
Basic and diluted earnings per share, EUR   1.68   0.76   1.58   0.63

JSC Olainfarm is one of the biggest pharmaceutical companies in Latvia with more than 45 years of experience in production of medication and chemical and pharmaceutical products. A basic principle of company’s operations is to produce effective top -quality products for Latvia and the rest of the world. Products made by the Group are being exported to more than 50 countries of the world, including the Baltics, Russia, other CIS, Europe, Asia, North America and Australia.

Additional information:
Jānis Dubrovskis
Investor Relations Advisor of JSC Olainfarm
Phone: +371 29178878
Email: janis.dubrovskis@olainfarm.com

In 2019, Olainfarm Group successfully started its transformation, which has already yielded significant results