The Consumer Health division reported sales of € 122 million, a decrease of 7.7% (Q3 2011: € 133 million). This reflected a reduction in organic sales of 10.3% and a 2.6% increase from changes in foreign exchange rates. The organic decline was driven primarily by lower European sales, the division’s biggest market. Consumer Health is in the process of restructuring the business in 2012 and 2013, an effort that also may include site closures. While some of these activities are affecting the division’s top-line performance negatively, the division’s EBITDA margin pre one-time items continued to improve year-on-year as a result of lower costs and more efficient resource allocation.
| XLS |
|
Consumer Health | Key figures | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
€ million |
Q3 2012 |
Q3 2011 |
Change |
Jan.–Sept. 2012 |
Jan.–Sept. 2011 |
Change |
|
Total revenues |
123.2 |
132.8 |
–7.3% |
352.7 |
367.7 |
–4.1% |
|
Sales |
122.4 |
132.5 |
–7.7% |
351.1 |
366.4 |
–4.2% |
|
Operating result (EBIT) |
7.4 |
16.9 |
–56.3% |
21.9 |
34.3 |
–36.2% |
|
Margin (% of sales) |
6.0% |
12.8% |
|
6.2% |
9.4% |
|
|
EBITDA |
10.3 |
18.8 |
–45.2% |
30.7 |
42.4 |
–27.5% |
|
Margin (% of sales) |
8.4% |
14.2% |
|
8.7% |
11.6% |
|
|
EBITDA pre one-time items |
18.4 |
18.8 |
–2.1% |
44.7 |
42.4 |
5.6% |
|
Margin (% of sales) |
15.0% |
14.2% |
|
12.7% |
11.6% |
|
Cost of sales was nearly unchanged at € 41 million (Q3 2011: € 42 million), as lower production costs were off-set by inventory write-downs due to the restructuring of the business. The division’s gross profit decreased to € 82 million due to the lower sales level (Q3 2011: € 91 million) and write-downs, resulting in a lower gross margin of 67.4% (Q3 2011: 68.5%). Consumer Health continued to effectively manage its operational spending. The division’s marketing and selling expenses fell by 7.4% due to an optimization of sales promotion spending and lower sales force costs while overall selling, general and administration (SG&A) costs increased 3.6% to € 69 million (Q3 2011: € 67 million). This increase is solely driven by € 8 million of one-time charges relating to the restructuring program.
R&D expenses fell to € 5 million (Q3 2011: € 6 million) due to increased focusing of R&D investments, less project-related spending and structural cost savings. On a reported basis, EBIT declined to € 7 million (Q3 2011: € 17 million). Adjusted for one-time restructuring costs of € 8 million, EBITDA pre one-time items declined 2.1% to € 18 million in the third quarter of 2012 (Q3 2011: € 19 million), but climbed to 15.0% of sales compared to 14.2% of sales in Q3 2011.
Consumer Health | Sales by region – Q3 2012
From a geographic perspective, Emerging Markets was the only region that generated organic sales growth for the division, driven by brands such as Cebion® and Sedalmerck®. In Europe, which represents 66% of the division’s top-line, sales were negatively affected by restructuring and regulatory-related sales reductions, declining OTC markets and strong competitive pressure in some Central and Eastern European countries.
| XLS |
|
Consumer Health | Growth components by region – Q3 2012 | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
€ million/change in % |
Sales |
Organic |
Exchange rate effects |
Acquisitions/ |
Reported |
|
Europe |
81.0 |
–14.2% |
1.4% |
– |
–12.8% |
|
North America |
0.4 |
–72.4% |
1.3% |
– |
–71.1% |
|
Emerging Markets |
36.7 |
2.4% |
6.3% |
– |
8.7% |
|
Rest of World |
4.2 |
–7.1% |
–0.1% |
– |
–7.2% |
Sales of the Cough and Cold portfolio remained stable as the division filled first orders for the upcoming winter season. The other portfolios declined due to the overall weaker performance in Europe compared to the third quarter last year.
First Nine Months 2012 Performance
During the first nine months of 2012, the division reported sales of € 351 million (9M 2011: € 366 million), a decrease of 4.2% due to a 5.9% organic decline in sales that was only partly offset by a 1.7% benefit from foreign exchange rates. The organic sales decline was related to weak Q1 and Q3 performance, mainly in Europe, related to the restructuring of operations in some markets and a refocusing of the brand portfolio towards strategic brands, as well as challenging market environments, especially in Central Europe.
EBITDA pre one-time items of Consumer Health increased during the first nine months of 2012 by 5.6% to € 45 million, or 12.7% of sales, compared to the prior year’s € 42 million, or 11.6% of sales.
This improvement was primarily the result of tighter cost control particularly in discretionary marketing and selling expenses.