REFILE-UPDATE 2-Grifols' half-year profit disappoints, shares fall sharply

Thu Jul 31, 2014 9:21am EDT

(Refiles to remove superfluous character from headline)

* Shares slump as much as 15 percent

* Earnings disappoint most expectations

* Company says Q2 result hit by one-offs linked to Novartis diagnostics purchase

By Elisabeth O'Leary and Emma Pinedo

MADRID, July 31 (Reuters) - Disappointing first-half earnings at Spanish healthcare firm Grifols sent its shares down as much as 15 percent on Thursday, despite the company blaming the weakness on one-offs from the purchase of a diagnostics unit from Novartis.

Analysts said the results could mean a lowering in their forecasts for full-year earnings for the global plasma-derivatives products maker, and expressed concern at shrinking profit margins.

Adjusted for non-recurring items associated with the recent $1.7 billion acquisition in November, Grifols' first-half net profit rose 25 percent to 288.7 million euros ($387 million).

That was below an average forecast of 298 million euros given in a Reuters poll of seven analysts. Forecasts ranged from 275 to 308 million euros.

The Barcelona-based company, also posted lower than expected sales in the second quarter alone and greater than anticipated currency effects because of a stronger euro.

Grifols, which makes plasma derivatives by separating plasma obtained from blood into proteins for use in medicine, does not provide formal earnings guidance.

The miss on forecasts was explained by expenses from the diagnostics unit acquisition which had not already been charged to accounts in the first quarter, a company spokeswoman said.

She declined to quantify the charges but said the impact of the purchase was now "basically complete".

But the share price fell as analysts prepared to cut back on full-year forecasts, with the shares down 10 percent at 35.145 euros at 1210 GMT, having dropped by as much as 15 percent earlier in the session, compared with a 0.25 percent rise in the Stoxx Europe 600 European healthcare sector index.

"If we assume that the first-half EBITDA (earnings before interest, tax, depreciation and amortisation) margin (of 32.5 percent) is a good proxy for the full year, then (the market) consensus needs to cut its full-year earnings per share estimate by approximately 10 percent," said Exane BNP Paribas analyst Julien Dormois in a note to clients.

"However, given the seasonality of sales and the catch-up we expect in the second half, we believe a 3-5 percent revision is more reasonable."

At the close of trade on Wednesday, Grifols shares were trading at a forward price to earnings ratio of 20 times, compared with a peer median of 17 times, according to Thomson Reuters data.

"The first half is more indicative (than the second quarter), without that being guidance ... which we do not give," the Grifols spokeswoman said.

The company had advised investors of a pressure on margins as a result of greater research spending, she said. ($1=0.7468 euros) (Editing by Julien Toyer and Greg Mahlich)

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