Q3, July - September
· Net sales amounted to MSEK 679.1 (443.7). This corresponds to an increase of 53% for the period. Following very strong growth in the first quarter the organic growth during the third quarter was -10% which follows the same pattern as during the second quarter of the year. The currency impact in the quarter was 0% while the acquisition of Trimb in 2019 and the acquired product portfolios Proct® from Leo Pharma and Pevaryl® from
· EBIT (Operating Profit) amounted to MSEK 43.7 (56.2) corresponding to a -22% decline.
· Adjusted EBITDA* amounted to MSEK 193.0 (156.9) corresponding to growth of 23% excluding non-recurring items related to acquired product portfolios totalling MSEK -18.1 (-28.2).
· The gross margin, defined as gross profit divided by net sales, was 57.8% (52.8%) for the quarter. The margin was affected positively by the acquired product portfolios.
· Cash flow from operating activities amounted to MSEK 63.2 (-85.9).
· Earnings per share was
· During the period
· Based on the authorization from the 2020 Annual General Meeting, the Board of Directors has resolved to sell up to 2,464,990 own shares to expand the company's financial flexibility. The sale of own shares shall be effected - on one or several occasions before the 2021 Annual General Meeting, where a new mandate should be requested if necessary - at Nasdaq Stockholm at a price within the effective registered price interval on Nasdaq Stockholm.
Summary of result, January - September
· Net sales amounted to MSEK 2 161.6 (1 251.9). This corresponds to an increase of 73% for the period. The organic growth during the first nine months of the year was 0%, currency impact -1% and 73% relates to the acquisition of Trimb in 2019 and the acquired product portfolios Proct® from Leo Pharma and Pevaryl® from
· EBIT (Operating Profit) amounted to MSEK 246.4 (163.9) corresponding to 50% growth.
· Adjusted EBITDA* amounted to MSEK 619.9 (447.7) corresponding to a 38% growth, excluding non-recurring items of -22 MSEK related to the acquisitions and the changed valuation of inventory from Q2 12.4 MSEK (see note 1), totalling MSEK -9.6 (-63.5).
· The gross margin, defined as gross profit divided by net sales, was 57.3% (54.3%) for the period. The margin was affected by a positive product mix from the acquired portfolios and a new valuation of inventory.
· Cash flow from operating activities amounted to MSEK 224.5 (117.7).
· Earnings per share was
· During the period, the Proct® portfolio was acquired from Leo Pharma with all related rights and assets. The transaction closed on
· During the period
· During the period, the Pevaryl® portfolio was acquired from
· During the period
· Based on the authorization from the 2020 Annual General Meeting, the Board of Directors has resolved to sell up to 2,464,990 own shares to expand the company's financial flexibility.
· At the end of the period, cash and cash equivalents and other current investments amounted to MSEK 365.3 (248.8) and net debt to MSEK 5 481.4 (5028.9).
* Alternative Financial Ratios (APM), note 4 for further information.
Comments by CEO
Our business continues to be impacted by the COVID-19 pandemic. Thus, the Q3 performance saw a continuation of the pattern from Q2 where Karo's net sales were suppressed by a rebalancing and normalization of inventories in the pharmacy chains, notably in Scandinavia. We expect that the rebalancing is now completed, but still expect the pandemic to have a net negative effect on net sales and growth. While certain
We continue to monitor the market developments closely and have contingency plans in place to reduce costs if the markets deteriorate as result of the COVID-19 second wave and if our net sales come under further pressure. The COVID-19 pandemic does not imply any changes to the strategy or long-term ambitions of Karo. We will continue to pursue a dual strategy of developing and optimizing our existing portfolio of brands and markets and add on value-adding acquisitions that generate scale and are synergistic to our existing business.
In 2020, we have invested into the business and what we label the scalable platform. This includes our systems landscape as well as personnel in key functions. These investments will help us drive the business more effectively in the long-term. We have also invested into the integration of our acquisitions. The Trimb integration is now almost complete and our focus turns to the integration of the Proct® and Pevaryl® portfolios.
In Q3 we saw an increase in our adjusted EBITDA of 23% and for the first nine months of 38%. As a result of our scalable platform investments the EBITDA margins declined, however, we expect to see improvements from the efficiency gains that our platform investments will generate going forward.
Significant events after period end
Nothing to report
Financial Calendar
Year-end report 2020
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