Consumer Health

In the second quarter of 2013, the Consumer Health division reported sales of € 116 million, a decline of –4.5% compared with the strong year-earlier period (Q2 2012: € 121 million). This reflects an organic sales decrease of –1.0% as well as a negative foreign exchange impact of –3.5%. The organic decline was mainly due to lower sales in Europe, the division’s largest market. Good sales growth in Germany was countered by the discontinuation of export products sold by the British subsidiary Seven Seas which contributed to higher comparable sales last year.

The demand for vitamins and mobility products was good in the second quarter. Strategic brands such as Bion®3 and Femibion® continued to gain share in the second quarter of 2013. Currency headwinds related mainly to the Venezuelan bolivar.

The efficiency measures initiated last year and better resource allocation improved the division’s cost structure and led to a visible profitability increase, evidence of the successful implementation of the efficiency program.

At € 37 million, cost of sales were slightly lower than in the year-earlier quarter. Since sales declined as well, gross profit fell by –5.0% to € 79 million (Q2 2012: € 83 million), resulting in a gross margin of 68.6% (Q2 2012: 68.9%).

Consumer Health succeeded in sustainably improving its cost structure. By optimizing promotional spending and lowering sales force costs, the division reduced its marketing and selling expenses by –2.5% to € 53 million. Administration expenses fell by –12.6%. R&D expenses declined to € 4 million as the division continued to streamline the focus of its R&D activities while achieving structural savings of –5.5%. In the second quarter of 2013, other operating income was € 1 million. This contrasts with other operating expenses of € 8 million in the year-earlier quarter, especially since one-time expenses of € 5 million were incurred in connection with the “Fit for 2018” efficiency program.

As a result, EBIT surged by 72.8% to € 18 million (Q2 2012: € 10 million) and EBITDA grew by 52.3% to € 20 million (Q2 2012: € 13 million). Adjusted for one-time expenses, EBITDA pre rose by 3.9% to € 19 million. Relative to sales, this gave a positive boost to the EBITDA margin before one-time items, which came in at 16.7% (Q2 2012: 15.4%).

Consumer Health | Sales by region – Q2 2013

Sales performance by region

From a geographic perspective, slight declines in organic sales were incurred in the key regions. Europe, which accounts for 65% of sales (Q2 2012: 63%) and is the division’s largest region, registered an organic decline in sales of –0.9% and a negative foreign exchange impact of –1.0%. As a result, sales in this region decreased slightly to € 75 million (Q2 2012: € 76 million). The visible increase in sales in Germany was not enough to offset the discontinuation of products sold by the British subsidiary Seven Seas or match a very strong comparable year-earlier quarter in France.

While the Emerging Markets region generated a slight organic sales increase of 0.4%, this was more than offset by negative foreign exchange effects of –7.5%. Strong organic growth rates were achieved mainly in Mexico, Brazil, Chile and Venezuela, as well as in large sections of Asia. This contrasted with currency headwinds stemming mainly from the Venezuelan bolivar that caused sales in Emerging Markets to decline to € 37 million (Q2 2012: € 39 million). Consequently, the share of divisional sales generated by Emerging Markets was only 32% (Q2 2012: 33%).

With an organic sales decline of –13.2% and negative foreign exchange effects of –10.7%, sales in the Rest of World region totaled € 4 million (Q2 2012: € 5 million). The proportion of divisional sales accounted for by this region was thus 3% (Q2 2012: 4%).

Half-year 2013 Performance

In the first six months of 2013, total revenues of the Consumer Health division increased by 1.5% to € 233 million (January–June 2012: € 230 million) and sales rose to € 232 million (January to June 2012: € 229 million). Owing to the solid first quarter of 2013, the division’s sales increased by 1.3%. This was attributable to organic growth of 3.9% amid a negative foreign exchange impact of –2.5%. Europe was primarily responsible for the organic increase in sales, with Germany and France driving the growth. In the Emerging Markets region, the strongest organic growth rates were generated by the Latin American countries Mexico, Chile, Brazil and Venezuela.

EBITDA pre one-time items of the Consumer Health division increased in the first half of 2013 by 20.3% to € 34 million or 14.5% of sales in comparison with € 28 million or 12.2% of sales in the previous year. This improvement resulted primarily from the improved cost structure achieved as a result of the “Fit for 2018” measures.