Richter’s Q4 Profit Threatened By Weakening Russian Rouble
Tamás Székely 2014.12.17.
Hungarian drugmaker Gedeon Richter has issued a profit warning because of the weaker Russian currency. The company’s shares fell as much as 7 percent before closing down 4.7 percent at 3,525 forint, the lowest level since March 5, Bloomberg reported. Richter said the devaluation of the rouble was expected to “negatively impact” fourth quarter earnings.
Richter’s sales in Russia accounted for just under one-quarter of total revenue, calculated in forints, in Q1-Q3, the company’s last earnings report shows. The company has released a statement, confirming its management was following closely developments in the Russian economy and would make all efforts possible to minimise the negative impacts on the company’s performance.
The Company hereby informs its shareholders that the significant devaluation of the Russian rouble is expected to negatively impact the Company’s fourth quarter 2014 results. The substantial devaluation of the Russian rouble results in a decline of both our Russian turnover as reported in EUR and the operating profit of the Group. Assuming that the current exchange rate prevails, a substantial one off financial loss is expected to occur on the year end reassessment of the rouble denominated trade payables. The Company’s management follows closely the extraordinary developments of the Russian economy and makes all the efforts to minimise the negative impacts thereof on the Group’s business performance. (Gedeon Richter Plc. )
Recently Richter has been named among top R&D companies of Europe. The Hungarian pharmaceutical and biotechnology company took the 166th place on the European Commission’s list of 500 companies, which invest significant part of their income in Research and Development projects. Richter’s consolidated sales revenue was approximately EUR 1.2 billion while its market capitalization amounted to EUR 2.8 billion in 2013. The company invested 12 percent of its income in R&D projects in the same period.
via bloomberg.com and hungarymatters.hu photo: Alexander Nemonov – AFP/Getty Images