UPDATE 1-Grifols cuts debt faster than hoped as profit soars

Wed Oct 31, 2012 12:16pm EDT

Related Topics

* 9-month net profit up more than 4-fold to 197 mln euros

* Revenues increase 53 pct to 1.96 bln euros

* Debt 2.5 bln euros vs 2.7 bln euros end-2011 (Adds deputy finance director comments, detail)

By Rodrigo De Miguel

MADRID, Oct 31 (Reuters) - Spanish pharmaceutical firm Grifols expects to cut through its 2.5 billion euros ($3.2 billion)of debt faster than previously forecast, the company's deputy finance director said.

Grifols, which makes drugs derived from blood plasma, reported a more than four-fold increase in net profit to 197 million euros on Wednesday, boosted by its acquisition of U.S. firm Talecris in 2011.

The Barcelona-based company has cut 200 million euros of debt so far this year and hopes to return to paying cash dividends once it has further cut its debt.

Grifols, the third-biggest blood products maker in the world, had debt of 2.5 billion euros at end-September, down from 2.7 billion euros at the end of last year, giving it a debt to EBITDA (earnings before interest, taxes, depreciation and amortisation) ratio of 3.2.

Grifols had aimed to reduce this ratio to between 2.2 and 2.5 four years after buying Talecris for $4 billion.

"We can now hope to be there a year earlier...instead of 2015, it could be at the end of 2014," Deputy Finance Director Nuria Pascual said in a phone interview after the results.

Grifols said on Monday it would propose a stock split and capital increase to its shareholders at a meeting next month.

The capital increase offers an alternative way for the company to reward shareholders as it pares its debt. As lending to companies and banks has evaporated in Spain, making raising cash harder, firms have redirected the money that was once destined for dividends to pay down debt and fund investments.

"We still want to return to paying dividends in cash but our priority is reducing debt," Pascual said.

The company will propose issuing one new Class B non-voting share for every 20 existing shares to investors at a Dec. 3 meeting.

Grifols, the best performing stock on Spain's bluechip index over the past year, also reported a 53 percent rise in revenues to 1.96 billion euros, in line with analyst expectations.

IMMUNE TO SPAIN

Grifols, a market leader in North America, said sales there grew 22.5 percent and represented 63 percent of its turnover.

The company bought three plasma donation centres in the United States in September and has focused on regions such as Latin America and Asia-Pacific as it reduces exposure to its crisis-hit home market.

Turnover fell 8.6 percent year-on-year to 165 million euros in Spain, which now accounts for just 8 percent of its turnover.

Reduced Spanish exposure also shields it from the issue of Catalonian independence. Its headquarters are in the regional capital of Barcelona, currently engaged in battle with Madrid over sovereignty.

"Two-thirds of our production is in the United States, 90 percent of our debt is denominated in dollars...It's not something that affects us, we're a global company," Pascual said.

Grifols shares were flat at 1611 GMT, having more than doubled in value over the past year. Bankia, the worst-performer on Spain's IBEX 35 index has shed almost 70 percent in the same time. ($1 = 0.7705 euros) (Additonal reporting and writing by Clare Kane, editing by Charlotte Cooper)

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