DGAP-News: Celesio AG / Key word(s): Final Results Celesio AG: 18.03.2014 / 07:00 --------------------------------------------------------------------- Celesio achieves earnings target and continues its successful strategy * Operating profit (EBIT) of 423 million euro at the upper end of the forecast * Dividend of 30 cents per share * European pharmacy network developing positively Stuttgart, 18 March 2014 Celesio AG's business performance in 2013 was in line with expectations. The forecast for operating profits, which was revised after the first half year of 2013, was achieved despite massive discount competition in Germany and negative currency effects. Adjusted EBIT amounted to 423.6 million euro. This represents a fall of 4.8 per cent (unadjusted: + 9.9 per cent) compared with the previous-year period. When additionally adjusted to take account of currency effects, it dipped only slightly by 0.7 per cent and remained almost unchanged compared to the previous-year level. The annual net profit was 166.4 million euro compared with -149.0 million euro in the previous year. Group revenue in the year was 3.9 per cent down on the previous year at 21,407.7 million euro. This decline is exclusively due to the deconsolidation of the Group's Czech activities and Irish wholesale business, as well as to currency effects. When adjusted for these effects, Group revenue actually rose slightly by 0.9 per cent thanks to a positive revenue performance, particularly in Germany. "2013 was an eventful, challenging, yet also successful year for Celesio. We have worked extremely hard to make consistent progress with our strategic projects," commented Marion Helmes, Speaker of Celesio's Management Board and CFO. On an operational level, business performance was influenced by sustained and intense competition over discounts in Germany, which overshadowed ongoing optimisation measures across the Group and could not be offset in full. Nevertheless, revenue actually rose slightly after adjustments for currency and consolidation effects. Marion Helmes added: "We have achieved the figures predicted in the revised forecast from the midpoint of the year. At 423 million euro, adjusted EBIT is towards the top of the expected range. Piloting our European pharmacy network under the single 'Lloyds' brand has proved a success: we successfully rolled out the concept over the course of the year and now have over 100 pilot pharmacies. In addition, we can be more than satisfied by the results of our Operational Excellence programme. Some significant progress has been made, most notably with our 'Top-in-Class Procurement' (TIC) purchasing initiative, and the earnings situation has improved as a result." On 24 October 2013, the McKesson Corporation, a leading US company in the healthcare services and information technology sectors, announced its intention to acquire a majority interest in Celesio. On 23 January 2014, McKesson then announced that it had acquired a majority stake in Celesio, enabling the two companies to forge a common path from that point onwards. "Having joined forces, we are ideally placed to meet the future demands of the healthcare industry and what is now an increasingly global distribution network for medicines. We have established a sound basis for further growth," remarked Marion Helmes. Performance in the divisions The Consumer Solutions division, the pharmacy business, generated revenue of 3,411.9 million euro and was slightly down by 1.5 per cent compared to the previous year's value. This decrease is entirely due to currency effects and the deconsolidation of the Group's Czech operations. When adjusted for these effects, revenue actually rose by 3.2 per cent. EBIT, adjusted for special effects, fell by 3.7 per cent from 215 million euro to 206.9 million euro (unadjusted: -2.5 per cent). When currency effects were additionally adjusted for, EBIT rose by 0.2 per cent. In the United Kingdom, Celesio's most important pharmacy market, LloydsPharmacy made good operational progress in 2013, as expected. Closer dovetailing between the pharmacy and wholesale business, together with the Group's new structure, is beginning to have an effect. In this connection, Celesio merged the headquarters of LloydsPharmacy and the pharmaceutical wholesaler AAH in the United Kingdom in a move aimed at boosting the efficiency and competitiveness of the business and leveraging synergy effects. In addition, the TIC purchasing initiative and Operational Excellence programme were major factors in making further cost savings. Negative effects from governmental measures as well as negative currency effects due to the weak pound Sterling could not, however, be fully offset. The Swedish pharmacy business developed extremely well, as expected, with both revenue and the gross profit margin recording an improvement. In Italy, revenue of non-prescription medicines showed a similarly pleasant improvement in the reporting period, which offset the decline in revenue of prescription medicines. Earnings came in much higher than in the previous-year period, benefiting from cost cuts. In Norway, Celesio likewise saw positive revenue growth, particularly in the non-prescription business. However, salary increases and higher pension burdens, inter alia, resulted in higher personnel expenses, which were not fully offset by the positive revenue performance in the reporting period. In the Pharmacy Solutions division, the wholesale business, revenue dropped by 4.3 per cent compared with the previous-year period to 17,996 million euro. Meanwhile, Germany posted markedly positive revenue growth. The French market saw a decline, which was mainly due to the substitution of patent-protected medicines with generic products. The deconsolidation of the Czech wholesale activities and Irish wholesale business, combined with currency effects, had a substantially negative impact on business performance. When adjusted for these effects, revenue rose by 0.4 per cent. The division's adjusted EBIT amounted to 307.3 million euro, 4.1 per cent below the previous-year period (unadjusted: +15.2 per cent). When additionally adjusted for negative currency effects, adjusted EBIT dipped slightly by 1.0 per cent. The sustaining intensive discount competition in Germany had a huge negative impact on earnings in spite of solid market growth. This trend poses huge challenges for the entire industry. The negative effects of this could not completely be counteracted by a rigorously pursued cost reduction policy. As expected, the development of the wholesale market in the UK declined slightly in terms of revenue. However this trend was more than offset by encouraging revenue in generic products by the Group's pharmaceutical wholesaler subsidiary AAH. The more favourable product mix, together with improvements in purchasing and additional efficiency increases, contributed to a gratifying rise in earnings. Dividend proposal for 2013 Celesio is maintaining its dividend policy, thus guaranteeing that it will distribute an attractive amount that is commensurate with the company's economic situation. The Management Board and Supervisory Board will therefore propose to the Annual General Meeting that a dividend of 0.30 euro per share be paid for the 2013 fiscal year, meaning that the amount distributed per share will remain constant compared with the previous year. Earnings forecast Celesio will systematically pursue the Group's strategic realignment in 2014. Progressive improvements will be made to companies' levels of efficiency, in addition to the optimisation of cost structures. The expansion of our European pharmacy network will also have a positive impact, enabling us to grow even more strongly from 2015 onwards. Overall, Celesio's Management Board expects to achieve an adjusted EBIT in 2014 that is slightly above the previous year. Key figures of the Celesio Group 2012 2013 Continuing operations Revenue EUR m 22,270.8 21,407.7 EBITDA EUR m 542.5 532.8 adjusted 1) 2) EUR m 579.6 548.6 EBIT EUR m 370.1 406.6 adjusted 1) 2) 3) EUR m 444.8 423.6 Net profit/loss EUR m 109.6 171.2 adjusted 1) 2) 3) 4) EUR m 201.5 186.4 Retail pharmacies 5) 2,177 2,175 Wholesale branches 5) 136 133 Discontinued operations Net profit/loss EUR m -258.6 -4.8 Continuing and discontinued operations Employees 5) 38,940 38,871 Net profit/loss EUR m -149.0 166.4 Change on a euro basis % Revenue EUR m -3.9 EBITDA EUR m -1.8 adjusted 1) 2) EUR m -5.4 EBIT EUR m 9.9 adjusted 1) 2) 3) EUR m -4.8 Net profit/loss EUR m 56.2 adjusted 1) 2) 3) 4) EUR m -7.5 Discontinued operations Net profit/loss EUR m 98.1 Continuing and discontinued operations Net profit/loss EUR m --- 1) Adjusted for special effects from certain non-recurring expenses and income (including tax effect) 2) Adjusted in 2012 for special effects from revaluations pursuant to IFRS 5 as well as deconsolidation effects in 2013 (including tax effect) 3) Adjusted in 2012 for impairment losses on non-current assets (including tax effect) 4) Adjusted in 2012 for special effects in the financial result (including tax effect) 5) Closing figures at the end of the reporting period About Celesio Group Celesio is a leading international wholesale and retail company and provider of logistics and services to the pharmaceutical and healthcare sectors. The proactive and preventive approach ensures that patients receive the products and support that they require for optimum care. With 39,000 employees, Celesio operates in 14 countries around the world. Every day, the group serves over 2 million customers - at 2,200 pharmacies of its own and 4,300 participants in brand partnership schemes. With around 130 wholesale branches, Celesio supplies 65,000 pharmacies and hospitals every day with up to 130,000 pharmaceutical products. The services benefit a patient pool of about 15 million per day. End of Corporate News --------------------------------------------------------------------- 18.03.2014 Dissemination of a Corporate News, transmitted by DGAP - a company of EQS Group AG. The issuer is solely responsible for the content of this announcement. DGAP's Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------- Language: English Company: Celesio AG Neckartalstr. 155 70376 Stuttgart Germany Phone: +49 (0)711 5001-735 Fax: +49 (0)711 5001-740 E-mail: [email protected] Internet: www.celesio.com ISIN: DE000CLS1001, DE000CLS1043 WKN: CLS100, CLS104 Indices: MDAX Listed: Regulierter Markt in Berlin, Düsseldorf, Frankfurt (Prime Standard), München, Stuttgart; Freiverkehr in Hamburg, Hannover; Terminbörse EUREX End of News DGAP News-Service --------------------------------------------------------------------- 257946 18.03.2014