Wesel, August 04, 2003
ALTANA: Strong profit growth in the first half year
Profit before taxes (EBT) rises 25%; operating growth margin 28%
Bad Homburg, August 4, 2003 - ALTANA AG (NYSE: AAA; FSE: ALT), Bad Homburg, reported sales of approximately €1.4 billion for the first half of 2003, up 7% on the equivalent previous year's figure of approximately €1.3 billion. "We remain on target to achieve a further double-digit increase in operating growth by the end of the year", commented Dr. h.c. Nikolaus Schweickart, Chairman of the Management Board of ALTANA AG. Expressed in local currencies, ALTANA improved its sales performance by 17%. The strong € cut 8% of growth.
ALTANA achieved by far the greater part of its sales revenue, around 83%, outside Germany. At approximately €1.1 billion, sales generated by international operations were 10% up on the previous year (2002: approximately €1 billion). The North American region merits special mention: sales in this important market were up 28% to €435 million (2002: €341 million). In Germany, where the 6% state-enforced discounting have already had a negative impact on domestic pharmaceuticals turnover, ALTANA reported sales of €235 million (2002: €244 million), 4% less on the comparable previous year's figure.
Operating profits rose distinctly more sharply than sales. EBITDA grew by 19% to reach €382 million (2002: €320 million), whilst consolidated operating profit (EBIT) was up by 24% to €324 million (2002: €262 million). At €329 million, profit before taxes (EBT) also rose by 25% on the comparable previous year's figure (€264 million).
This growth in profits is also reflected in the key returns indicators: the operating return (EBITDA) stands at 28.1% after the first six months (2002: 25.2%). At 24.2%, the return on sales before taxes (EBT) also improved (2002: 20.8%). Profit after taxes rose by 16% to €193 million over the first half of 2003 (2002: €166 million) with a tax quote of 41.4% (2002: 37.1%). This translates as a 17% rise in earnings per share, which now stand at €1.41 (2002: €1.21).
The mid-year headcount is approximately 10,000 employees as against about 9,500 at the same time last year (+5%). Approximately 5,500 employees are working outside Germany, approximately 4,500 in Germany.
ALTANA Pharma achieves further high growth rates: Pantoprazole reports 30% growth
ALTANA Pharma AG, Constance, boosted sales by 12% over the first half of 2003, from €878 million to €982 million. Adjusted for exchange rate effects (9%) and the divestment of the Diagnostics activities (3%), operating sales were up by 24%. The core Therapeutics business achieved a 17% increase in sales to €854 million (2002: €729 million). The main pillar of sales is the gastrointestinal drug Pantoprazole (e.g. Pantozol®/ Protonix®). ALTANA Pharma generated own sales of €560 million with this drug, which is equivalent to an increase of 30% (2002: €432 million). Including all our sales partners, world-wide sales grew to almost €1.1 billion over the first six months of 2003 (2002: €912 million), up 20% on the previous year's figure. In the U.S., the Pantoprazole market share of new PPI prescriptions stood at 17.7% in the relevant market segment as of the end of June and sales in US-$ rose by 53% in the first half year. The U.S. Patent Office recently extended patent protection for Pantoprazole to July 2010.
Over the first half of 2003, ALTANA Pharma's profit before taxes improved 32% on the previous year's €224 million, taking them to €296 million. Measured in terms of EBITDA, the operating return was 33.8% (2002: 29.8%). The return on sales (EBIT) also increased to 29.8% (2002: 25.4%). The significant growth in profits was powered by even higher sales of Pantoprazole, the positive impact on profits deriving from the disposal of the Chromagen product range for US-$ 22 million, plus the first-quarter milestone payment of €28 million in relation to our Roflumilast partnership with Pfizer.
Progress with our key respiratory product candidates, Alvesco® and Roflumilast, both now in Phase III of clinical development, continues well. Our co-operation partner Aventis has completed the clinical activities associated with the U.S. submission of Alvesco® and plans to file for approval in the U.S. in the second half year of 2003. Approval in Great Britain (EU reference country), Australia, Canada and Switzerland is expected for the current year. Launch in the first countries is expected in late 2003/early 2004. The application for approval in Europe for Roflumilast, a PDE4-inhibitor (indications asthma and COPD) is still on target for preparation towards the end of 2003.
ALTANA Pharma officially opened the ALTANA Research Institute (ARI) in Waltham/Boston in June. Together with our strategic partner, GPC Biotech (Munich), the ARI will focus on identifying new therapies in our core areas of research: gastroenterology, respiratory and oncology.
In early July, a second ALTANA Pharma field sales team of around 300 employees started in the U.S. marketing ALTANA's Pantoprazole (Protonix® by Wyeth in the USA). ALTANA Pharma has thus built up a U.S. field sales force of around 600 employees within 12 months, thereby pursuing its strategy to establish a fully integrated U.S. organization.
ALTANA Chemie: Sales growth in local currencies
ALTANA Chemie AG, Wesel, achieved a 2% increase in operating sales at the end of the first half of 2003. Due to the considerable negative impact of currency fluctuations and the continuing difficult economic environment, sales decreased slightly to €376 million (2002: €389 million).
Sales in the Additives & Instruments business unit totaled €158 million, a slight increase over the previous year. Expressed in local currencies, the growth rate was 7%. At €113 million, Coatings & Sealants achieved sales on a par with last year's level. The Electrical Insulation business unit reported sales of €105 million, which, due to the strong negative impact of exchange rate effects, was below last year's €120 million. Currency-adjusted sales declined 4%.There was modest growth in Europe. At €323 million, international sales accounted for 86% of total sales.
Profit before taxes fell from €58 million in the same period of 2002 to €47 million, mainly due to considerable exchange rate losses. The return on sales therefore dipped to 12.5% as against last year's 15.0%. However, the EBITDA margin of 18.6% indicates a high level of profitability on an international sectoral comparison.
The acquisition of the electrical insulation business of Schenectady International Inc./USA, which generates sales of around USD 90 million, is set to go ahead subject to final merger control examination.
Outlook 2003: Growth trend continues
Following the encouraging business performance over the first six months of this year, we expect an unchanged positive operating business development in the second half of the year. We maintain our forecast for the ALTANA Group of a further double-digit growth in sales and profits in local currencies for the year 2003. Given the strong second half of 2002, however, we expect to see the previous growth dynamics tail off somewhat over the second half of the year 2003 but the prevailing growth trend will continue. Converted to €, we anticipate a single-digit increase in sales based on the current currency situation. Group profits should develop significantly better than sales. A double-digit increase - also in € - seems to be achievable, provided that there will be no further currency fluctuations. High investments in the future (Research & Development, production) as well as the creation of new jobs will be carried on.
The full quarterly report is available at the ALTANA Homepage - www.altana.com
This press release contains forward-looking statements, i.e., current estimates or expectations of future events or future results. The forward-looking statements appearing in this press release include revenue and earnings projections for the ALTANA group, and estimates for the achievement of certain milestones in the development of ALTANA's pharmaceuticals under development, including Alvesco® and Roflumilast. These statements are based on beliefs of ALTANA's management as well as assumptions made by and information currently available to ALTANA. Many factors that ALTANA is unable to predict with accuracy could cause ALTANA's actual results, performance or achievements to be materially different from those that may be expressed or implied by such forward-looking statements. These factors include exchange rates and currency effects ALTANA's ability to develop and launch new and innovative pharmaceutical and chemical products, price regulations for pharmaceuticals and budgeting decisions of local governments and health care providers, the level of ALTANA's investment in pharmaceuticals related R&D, the sales and marketing methods used by ALTANA to distribute its pharmaceuticals, the composition of ALTANA's pharmaceuticals portfolio, ALTANA's ability to maintain close ties with its chemicals customers, the business cycles experienced by ALTANA's chemicals customers and the prices of the raw materials used in ALTANA's chemicals business.
Forward-looking statements speak only as of the date they are made. ALTANA does not intend, and does not assume any obligation, to update forward-looking statements to reflect facts, circumstances or events that have occurred or changed after such statements have been made.
This press release is also available on the Internet at www.altana.com.
Dr. Thomas Gauly
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