Local market supports Sopharma while taking another hit on export in H1 2015

One of the pharmaceuticals leaders on the Bulgarian Stock Exchange, Sopharma, registered another hit on top-line in H1 2015 from Ukraine and Russia – the latest earnings report by ELANA Trading analysts says.

Exports are down 28% y-o-y to BGN 51.2 m with sales to Russia down 18% y-o-y to BGN 31m and sales to Ukraine dropping by more than 60% to less than c.BGN 8m. However, Bulgaria partially soothes the negative effects from export crisis. It surpassed Russia and is Sopharma’s biggest market (38% of sales), up 13% y-o-y in H1’15. Analysts comment that positive developments further to the East (i.e. Kazakhstan) offer another small cushion.

Sopharma turned to the Euro for exports to Russia and Ukraine to minimize the FX exposure. Its strategy towards a leaner structure by merging smaller Bulgarian subsidiaries (i.e Bulgarian Rose-Sevtopolis) added to efficiency. The latter, however, was not large enough to sustain EBITDA. EBITDA margin declined 180 bps y-o-y to 23.7% but is up 440 bps vs. Q4’14.

The stock of Sopharma already lost 30% YTD on the Bulgarian Stock Exchange and is trading at a 3-year low. Analysts point out that such a decline represents also a buying opportunity for one of the most liquid stocks on the local market.

Sopharma is one of the biggest Bulgarian groups of companies, listed on the Bulgarian Stock Exchange. It is a leading producer, exporter and distributor of pharmaceutical products with a strong presence in Eastern and South-Eastern Europe, offering a wide range of prescription medicines and OTC products. It operates 15 pharmaceutical factories in Bulgaria, one in Ukraine, and two in Serbia. It is also the owner of the leading healthcare product distributer in Bulgaria – Sopharma Trading (SO5 BU) and the majority shareholder in a leading distributor and owner of a large pharmacy chain in the Baltics and Belarus – Briz, Latvia.

Sopharma shares are traded both on the Bulgarian Stock Exchange and the Warsaw Stock Exchange.

More about Sopharma H1 2015 results in the latest equity research report by ELANA Trading analysts