The Consumer Health division reported sales of € 121 million, an increase of 2.9% (Q2 2011: 118 million). This performance reflected organic sales growth of 1.0% and a 2.0% boost from changes in foreign exchange rates. These increases were driven primarily by the Emerging Markets, more than offsetting softer sales in Europe due to lower sales of Seven Seas products.
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Consumer Health | Key figures | ||||||
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€ million |
Q2 2012 |
Q2 2011 |
Change |
Jan.–June |
Jan.–June |
Change |
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Total revenues |
121.6 |
118.3 |
2.8% |
229.6 |
234.9 |
–2.3% |
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Sales |
121.1 |
117.6 |
2.9% |
228.7 |
233.8 |
–2.2% |
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Operating result (EBIT) |
9.6 |
9.5 |
1.3% |
14.5 |
17.4 |
–16.8% |
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Margin (% of sales) |
7.9% |
8.1% |
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6.3% |
7.5% |
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EBITDA |
12.6 |
13.0 |
–3.1% |
20.4 |
23.5 |
–13.3% |
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Margin (% of sales) |
10.4% |
11.0% |
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8.9% |
10.1% |
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EBITDA pre one-time items |
17.8 |
13.0 |
37.0% |
26.3 |
23.5 |
11.8% |
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Margin (% of sales) |
14.7% |
11.0% |
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11.5% |
10.1% |
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While cost of sales were little changed at € 38 million (Q2 2011: € 39 million), positive pricing trends and benefits from changes in foreign exchange rates helped the division’s gross profit increase to € 83 million (Q2 2011: € 80 million), resulting in a gross margin of 68.9% (Q2 2011: 67.7%). On an adjusted basis, the division continued to effectively manage its operational spending. Selling, general and administration (SG&A) costs increased by 7.7% to € 68 million (Q2 2011: € 63 million) due to € 5 million of one-time charges relating to the "Fit for 2018" efficiency program. Adjusted for these one-time costs, the division generated savings in sales promotion and realized lower sales force costs.
R&D expenses fell to € 5 million (Q2 2011: € 6 million) due to increased focusing of R&D investments and less project-related spending. On a reported basis, EBIT and EBITDA stayed at last year’s levels of € 10 million and € 13 million, respectively. However, adjusted for one-time restructuring costs, EBITDA pre one-time items improved 37.0% to € 18 million (Q2 2011: € 13 million) in the second quarter of 2012.
Consumer Health | Sales by region – Q2 2012
From a geographic perspective, the Emerging Markets continued to expand their contribution to the division’s sales, accounting for one-third of sales in the second quarter of 2012, while the share of sales generated in Europe decreased accordingly.
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Consumer Health | Growth components by region – Q2 2012 | |||||
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€ million/change in % |
Sales |
Organic |
Exchange rate effects |
Acquisitions/ |
Reported |
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Europe |
76.4 |
–3.7% |
1.1% |
– |
–2.6% |
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North America |
0.1 |
–85.5% |
3.0% |
– |
–82.5% |
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Emerging Markets |
39.3 |
12.3% |
4.7% |
– |
17.1% |
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Rest of World |
5.2 |
11.7% |
–3.4% |
– |
8.3% |
The Everyday Health Protection portfolio, which includes the Bion® 3 and Cebion® brands, was the strongest performer during the quarter, driven mainly by good sales in the Emerging Markets, where the majority of sales were generated. Sales of the division’s strong brands in Cough and Cold, Mobility, as well as Women’s and Children’s Health were growing while smaller local brands were declining across all health themes, reflecting Consumer Health’s efforts to refocus and narrow its marketing to strategic brands and geographic regions.
Half-Year 2012 Performance
During the first half of 2012, the division reported total revenues of € 230 million (H1 2011: € 235 million), a decrease of 2.3%. Sales declined similarly by 2.2% to € 229 million (H1 2011: € 234 million), driven by negative organic growth of 3.3% that was only partly offset by a 1.2% positive benefit from changes in foreign exchange rates. The weak sales performance was primarily related to Europe due to one-time supply chain issues in France during the first quarter and a slow start to the year for the Seven Seas range of products in the UK market. Sales in other product groups besides the main portfolio are currently declining due to more focused investments in marketing.
First-half EBITDA pre one-time items of Consumer Health increased 11.8% to € 26 million, or 11.5% of sales, compared to € 24 milion, or 10.1% of sales for the first six months of 2011. This improvement was primarily the result of tighter cost control particularly in discretionary marketing and selling expenses.