May 15, 2014 / 12:45 PM / 6 years ago

UPDATE 1-Slovenian drug group Krka's profits drop 17 pct on currencies

* Sales up by 1 pct

* 2014 forecast unchanged (Updates with quotes, details, background)

By Marja Novak

LJUBLJANA, May 15 (Reuters) - Slovenian pharmaceutical company Krka on Thursday reported a 17 percent fall in first-quarter net profit to 42.5 million euros, citing negative impact of exchange rates on its earnings, particularly the depreciation of the Russian rouble.

Krka, Slovenia’s largest listed company, said net negative currency effects amounted to 14 million euros ($19.19 million) in the first three months of the year, while they had a positive impact of 2 million euros on profit in the same period of 2013.

“In Ukraine, which is Krka’s second largest market in eastern Europe (behind Russia), orders, supply and payments are developing normally for now in spite of difficult conditions in that country at the moment,” Krka said.

Sales rose by 1 percent to 298 million euros, mainly on account of higher sales in eastern Europe where they rose by 16 percent. Sales in western Europe were down by 8 percent, the company said in a statement.

Krka maintained its forecast, made in November last year, for 2014 profit of some 172.8 million euros, unchanged from 2013, on sales of 1.25 billion euros, up from 1.2 billion in 2013.

“I believe it is possible that Krka would miss its 2014 profit target due to the exchange rate risk and the negative impact of the Ukraine crisis,” Marko Rozman, head of investment at the treasury sector of Dezelna Banka.

“However, the most important thing is that sales continue to grow albeit at a small rate so I do not expect the report of the fall in profit will push the shares down significantly,” he added.

Krka shares fell 1.34 percent to 61.66 euros by the end of trading on Thursday following publication of the results, while the blue-chip SBI index was down 0.28 percent. ($1 = 0.7294 Euros) (Reporting By Marja Novak; editing by Jason Neely and Jane Merriman)

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