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UCB Group preliminary full-year 2004 results
Continued growth in a year of transformation Net Profit after tax increases by 6% (19% at constant exchange rates)
UCB's 2004 net profit after tax of € 362 million was up 6% in real terms (19% at constant exchange rates) under Belgian GAAP. This continued growth was achieved in a year of major transformation for UCB. Celltech was consolidated within UCB as of August 1st, 2004 and Surface Specialties over the whole year, except for the Films business which was consolidated for the first 9 months of 2004.
Roch Doliveux, CEO of UCB said: "2004 was an exciting year for UCB. We made a number of important strategic moves transforming the company from a hybrid industrial group into a pure biopharmaceutical leader, combining a unique research platform of small and large molecule with existing profitable and growing global commercial operations. UCB is now better prepared to face its future challenges with more opportunities at hand to fuel its growth. Our priorities for 2005 are to complete the transition to pure biopharmaceutical, to expand our base of marketed products and to advance the clinical development of our strong product pipeline".
UCB Group
Variation
(in € million)
2004(*)
2003
In real terms
At constant exchange rates
Sales
3,068
2,966
+ 3%
+ 8%
EBITA (including royalties) (**)
506
487
+ 4%
+ 17%
Operating profit (EBIT)
483
487
- 1%
+ 13%
Ordinary profit
473
483
- 2%
+ 11%
Exceptional results
19
-4
Profit before Tax
492
479
+ 3%
+ 15%
Net Profit after tax
362
340
+ 6%
+ 19%
(*) Unaudited figures
(**) EBITA: Earnings before interest, tax and amortization
Financial Highlights
UCB Group sales of € 3,068 million were up 3% in real terms (+8% at constant exchange rates).
At constant consolidation scope and excluding currency impact, sales grew 9% and ordinary profit 16%.
Ordinary profit of € 473 million is down 2% in real terms (+11% at constant exchange rates) due to the US dollar weakness, the amortization of Celltech's goodwill and intangibles and the increase of financial charges to € 10 million.
Exceptional results amount to € 19 million in 2004. This is the result of, on the one hand, a positive R&D write back of € 50 million (that will not be reflected under IFRS) and a capital gain on the sale of the Film business and, on the other hand, restructuring charges, including € 62 million related to Celltech's acquisition.
Earnings per share reached € 2.48 in 2004, an increase of 6%.
At year end, UCB's net debt was € 1.7 billion which will be significantly reduced with the proceeds of the sale of Surface Specialties.
UCB Biopharma
After the successful integration of Celltech, UCB Biopharma's sales were € 1,679 million in 2004, an increase of 15%. Excluding Celltech, sales grew at 5% in real terms (10% at constant exchange rates).
Revenue growth was largely driven by our Central Nervous System franchise, with Keppra sales of € 417 million, up 33% (+ 41% at constant exchange rates). In the US, Keppra sales rose 29% to € 270 million (+ 42% in US dollar) and 38% in Europe to € 139 million. Keppra increased its leadership position in the treatment of epilepsy among new antiepileptics in the US and narrowed the gap as strong number two in Europe. Nootropil resisted well against generic competition with sales of € 103 million.
The Allergy franchise decreased marginally by 3% (+ 1% at constant exchange rates). In the US, total Zyrtec in-market sales reached $ 1,287 million (- 4% compared with 2003) of which UCB consolidates € 236 million sales showing a 10% decrease due to a weakening US dollar. Xyzal reached € 104 million, more than double than the previous year. During the last quarter, Xyzal sales exceeded Zyrtec's sales in Europe. Excluding currency impact, the increase of Xyzal sales more than compensates the decrease of Zyrtec sales globally.
Sales from Celltech products, excluding royalties, reached € 144 million over the last 5 months. Celltech royalties contributed € 52 million. Metadate's US prescriptions were up 20% YTD, gaining market share in the fast growing ADHD market. Tussionex market share increased to 30% in YTD December 2004, in a market negatively impacted by a weak cough and cold season.
EBITA for the Biopharma activity was up 1% (+15% at constant exchange rates) to € 402 million and included € 16 million positive contribution of Celltech business. The operating profit (EBIT) reached € 379 million, compared to € 397 million for the previous year, negatively impacted by € 23 million of Celltech goodwill and intangibles amortization and by the weakness of the US dollar.
As expected, the contribution of Celltech to UCB's ordinary profit was neutral excluding amortization of goodwill and intangibles.
R&D
Positive new advances in the field of CNS were noted in the second half of last year. The application for a new intravenous form of Keppra was filed in the US on December 20th and will be filed in Europe in March of 2005. When approved, Keppra will become the first new antiepileptic to have an intravenous form available for emergency treatment. The applications for extension of indications in children were submitted in the US and in Europe in December last year and were granted priority review by the FDA. The clinical programs for both Keppra monotherapy and brivaracetam were accelerated by several months. Brivaracetam showed superior efficacy in its Phase II study for patients with photoparoxystic epilepsy.
In Allergy, Xyzal was granted the indication of Persistent Allergic Rhinitis. The new paediatric drop of Xyzal was approved and launched in Germany in January 2005. Efletirizine completed successfully its once a day proof of concept study.
For CDP 870, UCB's strategy of introducing a liquid formulation on time into our profiling Phase III studies for Rheumatoid Arthritis was accepted by the FDA at the end of 2004. For Crohn's disease, the recruitment of patients in the two pivotal registration studies ended in November, two months earlier than expected. The response rates in the open phase of one of these studies are in line with those achieved by the only anti-TNF available on the market for the treatment of Crohn's disease.
Surface Specialties
The sales of Surface Specialties reached € 1,387 million in 2004. Excluding Films (sold end September 2004), the sales of Surface Specialties increased to € 1,112 million (excluding methylamines sold in September 2003) from € 1,001 million in 2003.
Thanks to the successful integration of Solutia's resins, additives & adhesives business acquired in February 2003, Surface Specialties' operating profit continues to grow. The EBITDA of the business to be sold to Cytec amounts to € 147 million excluding certain corporate expenses and non-recurring items. This result has been reached in spite of pressure on margins due to raw material cost increases, only partially offset by price increases in the latter part of the year.
In order to reflect changes in the business performance in the second half of the year, UCB and Cytec have agreed to amend the financial terms of the previously announced sale of Surface Specialties business. The total price now amounts to € 1,415 million, including a contingent consideration of up to € 50 million, the other elements of the deal remaining unchanged. The closing is expected to take place at the end of this month.
IFRS
UCB is on track for its IFRS conversion and pro-forma 2004 figures will be announced on March 23rd 2005.
* * * * * * *
Preliminary 2004 Belgian GAAP results are as follows:
UCB Group
Variation
(in € million)
2004 (*)
2003
In real terms
At constant exchange rates
Sales
3,068
2,966
+ 3%
+ 8%
Biopharma
1,679
1,463
of which Celltech
144
0
Surface Specialties
1,387
1,501
of which Films
275
362
of which Taminco
0
138
Non sectorial
3
2
EBITA (**)
506
487
+ 4%
+ 17%
Biopharma
402
397
of which Celltech
16
0
Surface Specialties
100
91
Non sectorial
4
-1
Operating profit (EBIT)
483
487
- 1%
+ 13%
Biopharma
379
397
of which Celltech
-7
0
Surface Specialties
100
91
Non sectorial
4
-1
Net Financial costs
-10
-4
Ordinary profit
473
483
- 2%
+ 11%
Biopharma
378
402
of which Celltech
-18
0
Surface Specialties
77
66
of which Films
5
3
of which Taminco
0
7
Non sectorial
18
15
Exceptional results
19
-4
Biopharma
-34
29
of which Celltech
-62
0
Surface Specialties
54
-33
Non sectorial
-1
0
Profit before taxes
492
479
+ 3%
+ 15%
Tax
-130
-139
Net profit after tax
362
340
+ 6%
+ 19%
Earning per share
2.48
2.33
+ 6%
+ 19%
(*) Unaudited figures
(**) EBITA: Earnings before interest, tax and amortization
Keppra Sales
Variation
(in € million)
2004
2003
In real terms
At constant exchange rates
USA
270
209
+ 29%
+ 42%
Europe
139
100
+ 38%
+ 38%
ROW
8
5
TOTAL TURNOVER
417
314
+ 33%
+ 41%
Allergy Franchise Sales (*)
UCB + Licensees
UCB consolidates
Variation
(in € million)
2004
2003
2004
2003
In real terms
At constant exchange rates
USA
1,035
1,183
236
262
-10%
- 1%
Europe
313
268
238
227
+ 5%
+ 5%
Japan
115
136
119
127
-6%
- 3%
ROW
89
87
56
54
TOTAL TURNOVER
1,551
1,674
649
670
-3%
+ 1%
Pfizer royalties (**)
132
145
(*) UCB's Allergy franchise includes Xyzal and Zyrtec/Cirrus (**) Booked in UCB's P&L under "Other operating Income"
