Hungary's Richter 4th-qtr net falls 61 pct, misses expectations

BUDAPEST Tue Feb 4, 2014 7:37pm EST

BUDAPEST Feb 5 (Reuters) - Hungarian drugmaker Richter reported on Wednesday a 61 percent fall in fourth-quarter net profit, missing market expectations, as higher costs, as well as financial and impairment losses swallowed up a rise in sales revenues.

Richter, which makes gynaecological, cardiovascular and central nervous system drugs, reported net profit of 4.78 billion forints ($20.87 million) for the three-month period, down from 12.17 billion in the same period a year earlier.

That was well below analyst expectations for net profit of 11.8 billion forints in a recent survey by financial news website portfolio.hu, even as quarterly revenue rose by 8.9 percent to 90.95 billion forints, a shade above expectations.

Richter, which has a market capitalisation of $3.64 billion according to Thomson Reuters data, said its domestic market, long a weak point, has stabilised after falls in the past years.

Exports, which account for the brunt of its turnover, also rose, driven by stronger sales to China, Romania and the European Union as well as Russia and the former Soviet bloc.

Despite the miss on quarterly profit, for the full year Richter's revenues rose by 4.8 percent to 1.18 billion euros, while operating profit margin came in at 13.8 percent of revenue, both in line with the company's guidance.

In the fourth quarter, Richter booked higher sales and marketing expenses, due in part to the marketing costs of its Esmya medicine to treat uterine myoma, as well as rising sales and marketing costs in China.

Richter said it had also received significantly lower milestone payments last year from its U.S. partner, Forest Laboratories Inc. The companies are linked through a planned new antipsychotic drug, Cariprazine, discovered by Richter and licensed to Forest in the United States and Canada.

Richter also said it had booked higher liabilities in the German market and its impairment losses also rose due to the termination of a research project in the fourth quarter.

It also posted a loss of 1.7 billion forints on financial items compared with an income of 321 million a year ago.

The company's shares finished trade 0.3 percent higher at 4,527 forints on the Budapest Stock Exchange on Tuesday, outperforming the blue chip index, which fell by 0.2 percent.

The shares have gained 23.3 percent over the past year according to Thomson Reuters data, compared with a 3 percent decline in the wider Budapest index.

Seven out of 11 analysts tracked by Thomson Reuters rate the stock a "buy" or a "strong buy," while four rate it a "hold."

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