Grifols´ sales grow 10.0% to 261.4 million Euros in the first quarter of 2011


Grifols increased its turnover in the first quarter of 2011 by 10.0% to 261.4 million Euros. Higher sales volumes in all divisions contributed to overall revenue growth. In this respect, Bioscience posted a 10.6% increase compared to the first three months of 2010 while the Diagnostic and Hospital divisions recorded 9.7% and 10.1% growth, respectively.

The balance of the sales´ geographical mix remained stable in the first quarter of 2011, in line with the 2010 trend. International markets accounted for over 75% of turnover. Turnover in the United States increased 24.8% to 88.2 million Euros. Sales in Europe, which generates 44.3% of revenues, were up 6.4% to 115.9 million Euros. The consolidation in other regions such as Latin America and Asia-Pacific that already account for 20% of total revenues continued.

The Group maintained its cost savings policy with the objective of optimizing margins. Recurrent EBITDA1 increased sequentially, reaching 68.8 million Euros and representing 26.3% of sales. However it fell by 4.7% year-on-year due to the timing of international tenders not called until March 2011 that had positively impacted 2010 first quarter sales. It was also influenced by the impact of the Spanish Health Reform (Royal Decree 8/2010), not effective until the second half of 2010.

The measures implemented by Grifols made it possible to reduce stocks, reaching a balance between the sales of the main plasma derivatives and the raw material required for its production. This trend will remain in place throughout the year in order to optimize revenues per liter of used plasma.

Taking into account the transaction costs relating to the proposed Talecris acquisition, EBITDA was 64.8 million Euros, 10.2% lower year-on-year.

Similarly, taking into account Talecris acquisition related costs, net profit was 33.6 million Euros compared to 36.5 Euros reported on the first quarter of 2010. This represents a 7.9% decrease and a 12.9% sales margin.

The net financial debt of Grifols at the end of first quarter 2011 stood at 654.6 million Euros, representing a ratio of 2.6x EBITDA.

Positive performance in all divisions

The Bioscience Division continues with the upward trend seen in previous quarters and contributed 78.1% to the Group´s total turnover. Plasma derivatives sales were up 10.6% in the first quarter of 2011, totaling 204.2 million Euros. Intravenous immunoglobulin (IVIG) demand was particularly strong in the United States and in Australia where Grifols increased its market share. Sales of other plasma derivatives such as factor VIII also recorded strong performance.
Grifols is laying the groundwork to be able to respond to the trend expected in the sector over the coming years. To this end, it started building a new plasma fractionation plant in Parets del Vallès (Barcelona-Spain) during the quarter. The new facilities will have the capacity to fractionate 1 million liters of plasma per year (with potential to expand to 2 million), allowing the Group to double its existing fractionation capacity in Spain from 2.1 million liters to a maximum of 4.1 million liters. This maximum capacity plus the installed capacity in the United States (2.2 million liters) will enable Grifols to have a total capacity of 6.3 million liters by 2014.

All areas in the Diagnostic Division, recorded growth, particularly the blood bank (15.9%) and pathogen inactivation (33.1%) activities. The excellent performance of all the business lines contributed to a 9.7% revenue growth of this division which amounted to 29.9 million Euros in the first quarter of 2011. International expansion is essential in order to ensure organic growth. This was the reason behind the long-term cooperative agreement that Grifols entered with the diagnostic division of Novartis for the commercialization of some of Grifols´ main immunohaematology diagnostic products, including reagents, automated blood typing products developed by Grifols and the BLOODchip® tests manufactured by the Spanish biotechnology firm Progenika Biopharma already being distributed by Grifols.

Revenues at the Hospital Division as at 30 March 2011 were up 10.1%, reaching 24.1 million Euros. The increased sales of Medical Devices (12.8%) and Hospital Logistics (21.7%) within the context of restrictive hospital budgets were two of the factors driving this positive revenue performance. It is worth mentioning the development of a new automated system to optimize hospitals´ management of healthcare material restocking and replacement, the StocKey® system.

1 Excluding the costs associated with the agreement to purchase Talecris Biotherapeutics

The facts and figures contained in this report which do not refer to historical data are "projections and forward-looking statements". The words and expressions like "believe", "hope", "anticipate", "predict", "expect", "intend", "should", "try to achieve", "estimate", "future" and similar expressions, insofar as they are related to Grifols Group, are used to identify projections and forward-looking statements. These expressions reflect the assumptions, hypothesis, expectations and anticipations of the management team at the date of preparation of this report, which are subject to a number of factors that could make the real results differ considerably. The future results of Grifols Group could be affected by events related to its own activity, such as shortages of raw materials for the manufacture of its products, the launch of competitive products or changes in the regulations of markets in which it operates, among others. At the date of preparation of this report Grifols Group has adopted the measures it considers necessary to offset the possible effects of these events. Grifols, S.A. does not assume any obligation to publicly inform, review or update any projections and forward-looking statements to adapt them to facts or circumstances following the preparation of this report, except as specifically required by law.
This document does not constitute an offer or invitation to purchase or subscribe shares, in accordance with the provisions of the Spanish Securities Market Law 24/1988, of July 28, the Royal Decree-Law 5/2005, of March 11, and/or Royal Decree 1310/2005, of November 4, and its implementing regulations.

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