Consumer Health 

In the third quarter of 2013, the Consumer Health division reported sales of € 131 million, an increase of 7.0% compared to a relatively weak year-earlier quarter (Q3 2012: € 122 million). Organic growth of 14.6% was countered by a negative foreign exchange impact, which lowered sales by –7.6%. All regions contributed to the strong organic growth, with higher sales volumes in both Europe, the division’s largest region in terms of sales, and Emerging Markets driving the overall development. Double-digit sales growth in Germany, France and in the Emerging Markets region more than offset the weak performance of the British subsidiary Seven Seas.

In the third quarter, six out of eight strategic brands (Bion®, Nasivin®, Femibion®, Cebion®, Sangobion® and Kytta®) grew at double digit rates and gained market share in the division’s key countries. As in previous quarters, negative foreign exchange effects were primarily attributable to Latin American currencies.

The implementation of the efficiency measures initiated as part of “Fit for 2018” and better resource allocation improved the division’s cost structure and led to a visible increase in profitability. In particular, the division’s strategic brands showed strong improvement in this respect. Structural adaptations, for instance changes to the product portfolio and the exit from unprofitable countries, resulted in a more profitable business model and, thus, to the division’s turnaround.

Cost of sales rose 7.6%, totaling € 44 million in the third quarter (Q3 2012: € 41 million). Gross profit amounted to € 88 million (Q3 2012: € 82 million), representing an increase of 6.3% and leading to a gross margin of 66.9% (Q3 2012: 67.4%).

The division succeeded in sustainably improving its cost structure. For example, it lowered its logistics and sales force expenses, which are reported under marketing and selling expenses. However, due to more intensive advertising in the third quarter of 2013, marketing and selling expenses rose in total by 4.4% to € 55 million (Q3 2012: € 53 million). Administration expenses fell by –16.0%. R&D expenses declined by –13.0% to € 4 million as the division continued to streamline the focus of its R&D activities. Other operating expenses (net) declined from € 11 million to € 2 million. In the year-earlier quarter, the one-time restructuring charges from the “Fit for 2018” program included in this amount totaled € 8 million, whereas in the third quarter of 2013 they were only € 1 million.

Taking into account these effects, the operating result (EBIT) surged by around 2.5 times from € 8 million to € 21 million in the third quarter of 2013. EBITDA more than doubled to € 23 million (Q3 2012: € 11 million). Adjusted for one-time costs, EBITDA pre soared by 25.4% to € 24 million in the third quarter of 2013 (Q3 2012: € 19 million). The strong improvement in profitability is also reflected by the increase in the EBITDA pre margin by nearly three percentage points to 18.4% (Q3 2012: 15.7%).

Consumer Health | Sales by region – Q3 2013

Sales performance by region

From a geographic perspective, all regions delivered strong organic sales growth as well as negative foreign exchange effects. Europe, which accounts for 68% of sales (Q3 2012: 66%) and is the division’s largest region, posted organic sales growth of 12.0% mitigated by a foreign exchange impact of –1.5%. Sales in this region thus increased by a total of 10.5% to € 90 million (Q3 2012: € 81 million). In particular, Germany and France achieved notable sales increases, overcompensating for the weak performance of the British subsidiary Seven Seas. In Germany, the market launch of an odorless version of Kytta®as well as strong demand for Femibion® had a visibly positive effect. France benefited especially from the market launch of Bion® Energie Continue and strong demand for seasonal products such as Apaisyl®.

In the Emerging Markets region, the division registered strong organic growth of 20.3%, which was mainly attributable to Sangobion®, Cebion®, Bion® and Nasivin®. Taking foreign exchange headwinds of –20.0% into account, sales increased slightly to € 37 million. Excellent organic growth rates were achieved especially in Brazil, India and Chile. The share of divisional sales generated by the Emerging Markets region declined to 28% (Q3 2012: 30%) due to adverse foreign exchange effects mainly from the Venezuelan bolivar.

With organic sales growth of 10.1% and significant foreign exchange headwinds of –16.9%, the Rest of World region generated sales of € 4 million (Q3 2012: € 4 million). The proportion of divisional sales accounted for by this region was thus 3% (Q3 2012: 4%).

Performance in the first nine months of 2013

In the first nine months of 2013, total revenues of the division increased by 3.3% to € 365 million (Jan.-Sept. 2012: € 353 million) and sales rose also by 3.3% to € 363 million (Jan.-Sept. 2012: € 351 million). This was attributable to organic growth of 7.6% along with a negative foreign exchange impact of –4.3%. Positive growth rates were achieved in all regions. Special mention should be made of the strong sales increases in Europe and Emerging Markets, the division’s two most important regions. France and Germany were the main drivers of the sales growth in Europe. In the Emerging Markets region, the strongest organic growth rates were generated by the Latin American countries Venezuela, Chile and Brazil.

EBITDA pre one-time items of the Consumer Health division increased in the first nine months of 2013 by 22.4% to € 58 million or 15.9% of sales in comparison with € 47 million or 13.5% in the previous year.