* Export sales drop instead of expected increase
* Weak forint, lower costs still help Q1 profit rise
BUDAPEST, Feb 8 (Reuters) - Hungarian drug producer and exporter Egis lifted after-tax profits by 14.1 percent in annual terms in its fiscal first quarter despite a drop in sales as it cut costs and was helped by a weaker forint, it said on Wednesday.
Egis posted a pre-tax profit of 5.33 billion forints ($24.43 million) in the October-December period, the first quarter in its business year, it said in its unaudited earnings report.
The firm’s domestic sales rose 0.9 percent in annual terms to 8.917 billion forints, but export sales fell 6.9 percent to 21.475 billion forints.
Total sales dropped 4.8 percent to 30.392 billion forints.
Earlier Egis projected 2-4 percent rise in sales for the business year with a 6-8 percent fall in Hungary which could be compensated by a rise in export sales.
The company increased sales by 5 percent in euro terms in its biggest export market, Russia, but sales in its second biggest market, Poland, slumped 35 percent to 10.9 million euros ($14.45 million).
Regulatory changes also led to falling sales in Slovakia, while a one-off logistic problem also curbed Ukrainian sales.
The forint weakened by 11 percent in annual terms in the first quarter against the euro to an average 304.97, and that raised the forint value of exports by 1.6 billion forints. Foreign sales still dropped, Egis said.
However, the exchange rate movements helped the company cut the ratio of costs to sales. The cost of sales fell 14.3 percent to 12.431 billion forints, and Egis also reduced research and management costs, it said.
The forint’s weakening also helped the company’s bottom line through its financial operations on which it posted a profit of 1.215 billion forints, up from 576 million forints in the same quarter of the previous financial year. ($1 = 218.2096 Hungarian forints) ($1 = 0.7545 euros) (Reporting by Sandor Peto; Editing by Jon Loades-Carter)