SOURCE: Recordati S.p.A.

February 08, 2007 10:06 ET

In 2006 Recordati Grows Internationally and Improves Its Profitability


- Consolidated revenue EUR 576.2 million, in line with 2005.

- Pharmaceutical revenue up 0.1%: sales in Italy down 7.8%, international sales up 5.4%.

- Operating income EUR 120.3 million, up 8.3%.

- Net income EUR 74.0 million, up 14.7%.

- Outlook for 2007: revenue EUR 650 million, operating income EUR 132 million, net income EUR 83 million

- 2006 dividend payout ratio increased to 50% of consolidated net income.

Milan, 8 February, 2007 - The Board of Directors of Recordati S.p.A. examined the preliminary consolidated results for 2006. The company's annual financial reports will be submitted to the Board for approval on 6 March 2006.

Full year 2006 financial highlights

- Consolidated revenue is EUR 576.2 million, in line with that of the preceding year. International sales are EUR 372.8 million, up 5.1%, and represent 64.7% of total sales. Pharmaceutical sales are EUR 537.8 million with a 5.4% growth of the international business. In Italy sales are down by 7.8%. Lercanidipine, Recordati's original antihypertensive drug, continues to perform very well with global sales growing by 21.2%. Pharmaceutical chemicals sales are EUR 38.4 million and are substantially in line with those of the preceding year.

- Operating income, at 20.9% of sales, is EUR 120.3 million, an increase of 8.3% over the preceding year. The operating margin improvement is mainly due to gross profit which further improved to a margin on sales of 66.7%, thanks to a favorable product mix.

- Net income at 12.8% of sales is EUR 74.0 million, an increase of 14.7% over 2005.

Management comments

"During 2006, thanks to the continuing success of our original drug lercanidipine and to the careful management of the company's resources, the profitability of our business improved further compared to that of 2005: operating income grew by 8.3% and net income by 14.7%" stated Giovanni Recordati, Chairman and CEO. "Furthermore, our commitment to the European expansion of our business is again confirmed by the acquisition of Jaba Farmacêutica and the other pharmaceutical businesses belonging to Grupo Jaba in Portugal. The international part of our business will continue to increase in importance and will already represent over two thirds of revenues with the consolidation of the Portuguese companies in 2007. We will continue with our commitment to invest in research and development. The approval of Zanitek® in Germany was a very important event for the future development of our business. This new product is a fixed combination of lercanidipine and enalapril for the treatment of hypertension. Germany will act as Reference Member State in the mutual recognition approval process in the rest of Europe which is expected to be completed during 2007."

Outlook for 2007

The Board of Directors also examined the budget for the current year. Thanks mainly to the expansion of our international business and to the success of lercanidipine Recordati's objectives for 2007 are to generate sales of EUR 650 million, operating income of EUR 132 million and net income of EUR 83 million.

2006 Dividend

The Board of Directors, in view of the company's solid balance sheet and the continuing strong cash flow generation, agreed to propose to the General Assembly which will approve the 2006 accounts an increase of the dividend payout ratio to 50% of the consolidated net income.

Cooptation of a Director

Furthermore, the Board of Directors coopted Mr. Federico Nazzari as Director in substitution of Mr. Francesco Costantini who resigned following his appointment as Chairman of the Board of Directors of two competing companies.

Meeting with the financial community

The full year 2006 preliminary results and the outlook for 2007 are being presented today by Recordati to the financial community and specialized press. The meeting will take place at 5 pm Italian time at the Italian Stock Exchange, Palazzo Mezzanotte, Piazza degli Affari 6, Milan.

The presentation can be downloaded from the website (Investors section, Company Presentations tab) as from 5 pm Italian time.

Conference call

A simultaneous translation into English of the proceedings will be available via conference call. Dial-in numbers are:

Italy +39 02 802 09 11

UK +44 208 7929 750

USA +1 866 2396 425

France +33 170 700 532

Germany +49 69 2222 2225

Recordati, established in 1926, is a European pharmaceutical group, listed on the Italian Stock Exchange (Reuters RECI.MI, Bloomberg REC IM, ISIN IT 0003828271), dedicated to the research, development, manufacturing and marketing of pharmaceuticals, with headquarters in Milan, Italy, operations in the main European countries, and a total staff of over 2,000. A European field force of over 1,000 medical representatives promotes a wide range of innovative pharmaceuticals, both proprietary and under license, in a number of therapeutic areas. Recordati's current and growing coverage of the European pharmaceutical market makes it a partner of choice for new product licenses from companies which do not have European marketing organizations. Recordati is committed to the research of new drug entities within the cardiovascular and urogenital therapeutic areas in which its research team has proven scientific competence and a track record of discovery and development of original drugs, the most recent of which, lercanidipine, a latest generation calcium channel blocker for the treatment of hypertension, is the company's leading product. Consolidated revenue for 2005 was EUR 576.1 million, operating income was EUR 111.1 million and net income was EUR 64.5 million.

Statements contained in this release, other than historical facts, are "forward-looking statements" (as such term is defined in the Private Securities Litigation Reform Act of 1995). These statements are based on currently available information, on current best estimates, and on assumptions believed to be reasonable. This information, these estimates and assumptions may prove to be incomplete or erroneous, and involve numerous risks and uncertainties, beyond the Company's control. Hence, actual results may differ materially from those expressed or implied by such forward-looking statements.

All mentions and descriptions of Recordati products are intended solely as information on the general nature of the company's activities and are not intended to indicate the advisability of administering any product in any particular instance.


Summary of consolidated results prepared in accordance with the International Accounting Standards and International Financial Reporting Standards (IAS/IFRS)

(thousands of EUR )

|INCOME STATEMENT         |    2006   |    2005   |  Change %|
|REVENUE                  |    576,186|    576,080|       0.0|
|Cost of sales            |  (192,011)|  (200,623)|     (4.3)|
|GROSS PROFIT             |    384,175|    375,457|       2.3|
|Selling expenses         |  (191,126)|  (192,342)|     (0.6)|
|Research and development |   (45,395)|   (44,959)|       1.0|
|expenses                 |           |           |          |
|General & administrative |   (27,167)|   (25,301)|       7.4|
|expenses                 |           |           |          |
|Other income (expenses), |      (146)|    (1,725)|    (91.5)|
|net                      |           |           |          |
|OPERATING INCOME         |    120,341|    111,130|       8.3|
|Financial income         |    (2,159)|    (4,132)|    (47.7)|
|(expenses), net          |           |           |          |
|PRETAX INCOME            |    118,182|    106,998|      10.5|
|Provision for income     |   (44,151)|   (38,435)|      14.9|
|taxes                    |           |           |          |
|NET INCOME from          |     74,031|     68,563|       8.0|
|continuing operations    |           |           |          |
|Discontinued operations  |          0|    (4,020)|   (100.0)|
|NET INCOME               |     74,031|     64,543|      14.7|
* Restated for comparison purposes
|COMPOSITION OF NET SALES:|   2006  |   2005  |  Change %|
|Pharmaceuticals          |  537,834|  537,445|       0,1|
|Pharmaceutical Chemicals*|   38,352|   38,635|     (0,7)|
|Total                    |  576,186|  576,080|       0,0|
|- of which International |  372,754|  354,799|       5,1|
Pending completion of independent and statutory audits.

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Contact Information

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