May 14, 2009 / 6:15 AM / 10 years ago

UPDATE 1-Stada optimistic after Q1 profit beats forecast

* Q1 adj net income down 13 pct at 28.3 mln eur

* Says 2009 sales and profit could beat last year’s

(Adds details, background)

FRANKFURT, May 14 (Reuters) - German generic-drugs maker Stada Arzneimittel STAGn.DE reported a 13 percent drop in first-quarter net profit, hurt by regulatory changes and competition, but said full-year results could beat 2008.

The world’s fifth-largest generics maker said net profit, adjusted for one-offs including currency and interest-rate hedging, fell to 28.3 million euros ($38.6 million). This was better than the roughly 21 million euros analysts expected.

Sales in Germany, its largest market, rose 1 percent even though the switch to bulk purchasing by health insurers weighed on prices.

Stada’s first-quarter group sales fell 6 percent to 375.9 million euros, which was better than the 357 million euros expected by analysts on average, the company said on Thursday.

Stada reiterated that 2009 adjusted earnings before interest, tax, depreciation and amortisation should amount to at least 250 million euros, down as much as 15 percent from the year before.

Chief Executive Hartmut Retzlaff, however, struck a more optimistic note than previously about the group’s prospects.

He said that with an expected revival of business in the second half of the year, sales and earnings this year could match or even beat those of 2008.

Germany’s largest health insurer AOK is spearheading a move by insurers towards bulk procurement deals to cut the cost of off-patent drugs, upsetting generic makers’ marketing strategy that used to be targeted at doctors.

Stada derives more than a third of group sales from Germany, with Russia and Serbia accounting for about 10 percent each.

Stada shares have slumped more than 22 percent so far this year, worse than the 8.4 percent decline in European DJ Stoxx Health Care Index SXDP, as Stada toned down its long-term profit forecast in March.

The shares trade at 11.3 times estimated 2009 earnings, in line with the healthcare sector’s average multiple, according to StarMine.

Reporting by Ludwig Burger; Editing by John O'Donnell

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