print version 

Find company
Home About the ProjectContact usFor the Clients
Enter code or ISIN
 
alpha / industry search

Issuers' Corner
Press Releases
Annual Reports Library

Financial Statements
SEC & FFMS Filings
Corporate Presentations
GM Materials
Issues Documents
Corporate Governance Materials
Russian Company Guide
Company Profiles
Corporate Calendar
Markets Corner
Consensus Estimates
Media Corner
News Line


Get updates



Home  Issuers' Corner  Press Releases REGISTER LOG IN

Press Releases

company search
all press releases
all Pharmacy Chain 36.6 press releases

Pharmacy Chain 36.6

October 9, 2003

Pharmacy Chain 36.6 announces half year 2003 financial results

Moscow, Russia - October 9, 2003 – Pharmacy Chain 36.6 OJSC today announced its financial results for the six months ended June 30, 2003. 

 

The first half of the year saw strong sales growth of 28.1% for the group to US$68.4 million compared to US$53.4 million in the first six months of 2002. Gross profit increased by 28.2% to US$26.4 million in the first six months of 2003 compared to US$20.6 million in the corresponding period in 2002, and gross margin remained steady at 38.6%. Consolidated EBITDA was US$4.8 million.

 

Operating income fell to US$3.1 million in the first half of 2003 compared to US$5.7 million in the first half of 2002, and the company experienced a net loss of US$944,000 compared to net income of US$2.2 million in the first six months of 2002. This was primarily due to costs related to the company’s rapid expansion of its retail chain and increased personnel costs as well as pricing pressures due to increased competition in the retail sector. In addition, International Accounting Standard (IAS) 29, which used to classify Russia as a hyperinflationary economy up to 2002, caused a non-recurrent US$1.7 million net monetary gain in the first six months of 2002.

 

Commenting on the financial results, Artem Bektemirov, Chief Executive Officer of Pharmacy Chain 36.6, said: “We are satisfied with sales growth in our core businesses of 28.1%. We expect the majority of pharmacies, scheduled to open this year, will be launched in the second half of 2003, which has increased start-up costs and SG&A expenses but will not yield immediate profit or contribute to this year’s revenue.  By the end of  September 2003, we launched 15 branded pharmacies, with a further 10 to be opened before the end of this year, which will increase the total number of the stores by approximately 50% compared to 2002. In the first half of 2003, we also witnessed an increase in competitive pricing, affecting all retailers in the marketplace. In addition, we have incurred extra commercial and management costs, developing and implementing programmes, aimed at increasing the company’s profitability in the future.”


In the company’s Pharmacies 36.6 retail business, sales increased 31.5% to US$35.6 million in the first six months of 2003 compared to US$27.1 million in the corresponding period of 2002. Gross profit grew 35.5% to US$11.2 million compared to US$9 million in the first half of 2002. Gross margins were average for the industry at 31.3%.

 

Average sales per square metre in the retail business amounted to US$3,592, an 18% increase on the average of 2002. The average purchase in ‘36.6’ branded pharmacies increased 6% compared to the average purchase of 2002.

Over the first six months of 2003 the company implemented a new incentive system in the retail business, which has reduced personnel turnover dapproximately by 50%. At the same time, the introduction of the new system coupled with wage inflation led to higher personnel costs during this period. Furthermore, increased labour costs in the regions also pushed up personnel expenditures in the manufacturing sector.

 

At Veropharm, the company’s manufacturing arm, sales increased 17.5% during the first six months of 2003 to US$22.8 million compared to US$19.4 million in the corresponding period of 2002. Gross profit increased 31% from US$9.9 million to US$13 million, while a pro-active promotional and advertising campaign contributed to gross margins reaching 56.8%, compared to 51% a year earlier, increasing marketing costs at the same time.

 

In April 2003, Veropharm received a Good Manufacturing Practice (GMP) quality assurance certificate from the World Health Organization (WHO), which enables Veropharm to supply its products through WHO channels. 

 

Sergey Krivosheev, Chairman of the Board of Pharmacy Chain 36.6, said: “We remain committed to our long-term strategy of becoming Russia’s truly nationwide pharmacy chain. Over the past six months we have demonstrated significant sales growth. We have also launched our Moscow regional network with the opening of the first branded 36.6 pharmacy in August 2003. Our new high caliber management are taking all the necessary steps to ensure a return to profitability. We have also initiated the founding of the Russian Association of Pharmacy Chains in August 2003, which will give a new impetus to the retail healthcare sector country-wide and will serve as a strong platform in our combat against counterfeit medicines and will raise overall transparency.”

 


 

For further enquiries contact:

 

Pharmacy Chain 36.6

Anna Ionova,

Corporate Secretary

Tel: +7 095 792 5207

Email: ionova@oao366.ru

 

 

Shared Value Ltd
Marina Kagan,

Partner

Tel:  +44 207 321 5019
Mobile: +44 7775 99 2437
Email: mkagan@sharedvalue.net

 



1 half 2003 Key Financial Data
 

Consolidated (OAO “Pharmacy chain 36.6” and subsidiaries)

 

(Dollar amounts in thousands)

6 m 2003

2002

6 m 2002*

2001

Change (1h 2003 – 1h 2002)

 

 

 

 

 

 

Sales

68,379

118,724

53,377

105,003

28.1%

Gross profit

26,392

45,998

20,580

39,074

28.2%

Gross margin, %

38.6%

38.7%

38.6%

37.2%

 

Selling, general and administration expenses

(23,026)

(35,422)

(14,611)

(30,946)

57.6%

Research and Development expenses

(296)

(463)

(308)

(495)

              (3.9%)

EBITDA

4,832

16,426

9,357

11,813**

            (48.4%)

Operating income

3,069

10,113

5,661

7,633

(45.8%)

Income tax expense

(666)

(2,210)

(1,041)

(2,476)

36.0%

Net income before extraordinary items

(944)

3,280

2,185

2,034

(143.2%)

Gain on debt restructuring

 

 

 

18,160

 

Net Income

(944)

3,280

2,185

20,194

 

 

 

 

 

 

 

Net Cash Flow from Operations

 

3,603

 

(1,384)

 

*Financial statements for six months 2002 are shown in line with the Company’s disclosure for the six months ended June 30, 2002

 

**Without extraordinary items in 2001

 

Retail Segment

 

(Dollar amounts in thousands)

6 m 2003

2002

6 m 2002

2001

Change

 

 

 

 

 

 

Sales

35,634

58,836

27,095

49,094

31.5%

Gross profit

11,150

19,180

9,020

14,832

35.5%

Gross margin, %

31.3%

32.6%

33.3%

30.2%

 

Selling, general and administration expenses

(11,794)

(18,136)

(7,914)

(15,555)

49.0%

EBITDA

202

3,305

2,366

893*

(91.5%)

EBITDA %

0.5%

5.6%

8.7%

1.8%

 

Operating income

(644)

1,044

1,106

(722)

 

 

Pharmaceutical Manufacturing Segment

 

(Dollar amounts in thousands)

6 m 2003

2002

6 m 2002

2001

Change

 

 

 

 

 

 

Sales

22,842

43,874

19,434

41,724

17.5%

Gross profit

12,981

23,404

9,910

20,946

31.0%

Gross margin, %

56.8%

53.3%

51.0%

50.2%

 

Selling, general and administration expenses

(8,043)

(13,039)

(4,981)

(11,742)

61.5%

Research and Development expenses

(296)

(463)

(308)

(495)

(3.9%)

EBITDA

5,916

13,516

6,566

9,109

       (9.9%)

EBITDA %

25.9%

30.8%

33.8%

21.8%

 

Operating income

4,642

9,901

4,620

8,709

0.5%

 

 

 

 

PHARMACY CHAIN 36.6 OJSC AND SUBSIDIARIES

 

CONSOLIDATED STATEMENT OF OPERATIONS FOR THE 6 MONTHS ENDED JUNE 30, 2003

(in US Dollars and in thousands)

 

 

6 months ended June 30, 2003

 

Year ended December 31, 2002

6 months ended June
30, 2002

 

(Unaudited)

 

(Audited)

 

 

       

NET SALES

68,379

 

118,724

53,377

COST OF SALES

(41,987)

 

(72,726)

(32,797)

 

GROSS PROFIT

 

26,392

 

 

45,998

 

20,580

 

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

 

(23,026)

 

 

(35,422)

 

(14,611)

 

RESEARCH AND DEVELOPMENT EXPENSES

 

(296)

 

 

(463)

 

(308)

 

OPERATING INCOME

 

3,069

 

 

10,113

 

5,661

 

NON-OPERATING INCOME (EXPENSES):

       

        Interest expense

(2,890)

 

(6,166)

(3,291)

        Net gain on monetary position

   

 

1,673

        Other non-operating expenses,net

(692)

 

2,395

(44)

        Foreign currency exchange loss

212

 

(1,257)

(606)

        Gain on debt restructuring

-

   

-

 

INCOME BEFORE MINORITY INTERESTS AND INCOME TAX EXPENSE

 

 

(301)

 

 

 

5,085

 

 

3,393

 

Income tax expense

 

(666)

 

 

(2,210)

 

(1,041)

 

INCOME BEFORE MINORITY INTERESTS

 

(967)

 

 

2,875

 

2,352

 

Minority interests

 

23

 

 

405

 

(167)

 

       

NET INCOME

(944)

 

3,280

2,185

 

 

 

 

 

 

 

 

 

 

 

       

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PHARMACY CHAIN 36.6 OJSC AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEET AT JUNE 30, 2003

(in US Dollars and in thousands)

 

 

June 30,

2003

(Unaudited)

 

December 31, 2002

(Audited)

 

June 30, 2002

(Audited)

ASSETS

 

 

 

 

 

NON-CURRENT ASSETS:

 

 

 

 

 

Intangible assets, net

11,054

 

10,841

 

10,659

Property, plant & equipment, net

38,794

 

33,595

 

31,979

Other long-term assets

2,876

 

856

 

800

 

 

 

 

 

 

 

Total non-current assets

 

         52,724

 

 

45,292

 

 

43,438

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

Inventories

17,469

 

17,378

 

14,600

Accounts receivable (net of bad debt provisions)

        11,584

 

11,625

 

8,165

Other receivables and prepaid expenses

          9,187

 

9,087

 

6,024

Available-for-sale investments

 

 

 

 

71

Cash & cash equivalents

2,205

 

1,315

 

1,680

 

Total current assets

        40,445

 

 

39,405

 

30,540

 

 

 

 

 

 

TOTAL ASSETS

93,170

 

84,697

 

73,978

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS' EQUITY:

 

 

 

 

 

Share capital

13,193

 

159

 

           1,015

Additional paid-in capital

2,078

 

2,308

 

           2,253

Other reserves

(923)

 

        (325)

 

(172)

Retained earnings

23,088

 

22,603

 

       19,739

Total shareholders’ equity

37,436

 

24,745

 

22,835

 

 

 

 

 

 

MINORITY INTERESTS

2,241

 

2,119

 

2,583

 

 

 

 

 

 

LONG-TERM LIABILITIES:

 

 

 

 

 

Long-term debt

13,520

 

13,325

 

9,317

Deferred income tax payable

4,108

 

4,115

 

4,434

Total long-term liabilities

17,629

 

17,440

 

13,751

 

 

57,306

 

 

44,304

 

 

39,169

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

Accounts payable

10,849

 

10,929

 

10,053

Other payables and accrued expenses

5,288

 

6,458

 

4,484

Current portion of long-term debt

19,727

 

23,006

 

20,272

Total current liabilities

35,864

 

40,393

 

34,809

 

 

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

 

93,170

 

 

84,697

 

 

73,978

 

 

 

 

 

 

 


 

Some of the information contained in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of Pharmacy Chain 36.6 OJSC, as defined in the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.  We wish to caution you that these statements are only predictions and that actual events or results may differ materially. We do not intend to update these statements to conform them to actual results. We refer you to the documents Pharmacy Chain 36.6 OJSC files from time to time with the Russian Federal Securities Commission. These documents contain and identify important factors, including those contained in the section captioned “Risk Factors” in our Offering Circular, dated January 30, 2003, that could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, potential fluctuations in quarterly results, and risks associated with our competitive environment, acquisition strategy, ability to develop new products or maintain market share, brand and company image, operating in Russia, volatility of stock price, financial risk management, and future growth.

 


 

Notes to Editors:

 

Pharmacy Chain 36.6 OJSC is a leading healthcare and pharmaceutical, retail and manufacturing group in Russia. The business was founded in 1991.

 

The company’s core business includes a fast-growing chain of pharmacies. The company currently has 55 branded stores in Moscow and Moscow Region, 15 of which were opened in 2003.

 

The company’s manufacturing subsidiary, Veropharm, currently owns three manufacturing facilities and is one of the country’s largest and fastest-growing domestic pharmaceutical producers. It was Russia’s largest manufacturer of plasters and oncology medicines, and third largest producer of vitamins in 2002. In the first half of 2003, Veropharm’s share of the Russian pharmaceutical market increased to 6.6%, compared to 5.6% a year earlier, according to Pharmexpert data.


OJSC Pharmacy Chain 36.6 has over 5,000 employees.

 

The company’s 36.6 name refers to the optimal body temperature in Celsius. According to a 2002 Moscow Gallup Media Survey, the company’s 36.6 brand was ranked No.1 in terms of retail brand awareness out of all retail stores that have appeared in Moscow since the dissolution of the Soviet Union.

 

 

 

Search by industry

Agriculture, Foresty and Fishing | Chemicals | Engineering | Ferrous Metals | Financial, Insurance & Real Estate | Food & Kindred Products | General Construction | Information Technology | Media & Publishing | Non-Ferrous Metals | Oil & Gas | Pharmaceuticals | Power Industry | Precious Metals and Diamonds | Telecommunications | Transportation | Wholesale & Retail Trade

Search by alpha index

A B C D F G H I K L M N O P R S T U V W X Z


Site Map
© RUSTOCKS.com
Privacy Statement | Disclaimer