Hungary's Richter profit jumps 144% on FX gains, keeps 2024 guidance
BUDAPEST, Aug 6 (Reuters) -Pharmaceutical company Richter GDRB.BU exceeded analyst expectations with a massive jump in quarterly profit on Tuesday thanks largely to foreign exchange gains, and the Hungarian firm reiterated its guidance for 2024.
Revenues grew to 213 billion forints ($586.31 million) in the second quarter, up 16% on the year, bringing it to 413 billion forints for the first half, up 14% year-on-year.
"FX-adjusted revenue growth was 12.5% in H1, as the weaker HUF (forint currency) provided some tailwind to the reported numbers," the company said.
A weaker forint makes the firm's exports more affordable for buyers abroad, which could increase market share and export volumes. This year, the firm benefited from forex gains after significant losses last year.
Net profit jumped nearly 144% to 70 billion forints in the second quarter, from 28.7 billion last year. Net profit in the first half nearly doubled from a year ago to 138.2 billion forints.
"The change continues to be driven by volatile exchange rate movements. In H1 2024 Richter booked HUF 21bn FX gains (nearly all of that non-cash, unrealized gain on working capital items) due to the weaker HUF, as opposed to large FX losses of HUF 49bn suffered a year ago," they said.
"The impact of the RUB (rouble)weakness is slowly fading, while the weaker HUF (forint)provided some tailwind for reported sales in Q2 across all segments," the company added.
The company reiterated its 2024 guidance, saying it has reached roughly the middle of its expected profit for the year.
"Profitability improved across the business and we remain well on track to meet our full-year ambitions and targets," Richter CEO Gabor Orban said in a statement.
Orban welcomed a decision last month by the government to phase out windfall taxes on drug companies from 2025. These taxes had been introduced in 2022 in some sectors to plug holes in the budget.
Sales to Russia were 33 billion forints ($90.84 million), down 8.1% in forint terms but up 7.8% in rubles.
"Business operations prevailed broadly at levels experienced prior to the (Russia-Ukraine) war," the company said.
($1 = 362.9800 forints)
Reporting by Anita Komuves
Editing by Bernadette Baum
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