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Important items at a glance

• Group sales increase to Euro 507.4 million (+7 percent) – organic growth +3 percent
• Despite currency translation expenses of Euro 15.9 million before tax due to the devaluation of the Russian ruble as well as further significant currencies of the market region CIS/Eastern Europe, reported EBITDA rises slightly to Euro 97.7 million (+1 percent) – adjusted EBITDA records growth to Euro 114.7 million (+17 percent) 
• Reported net income approximately at the level of the previous year with Euro 35.0 million – adjusted net income shows growth to Euro 52.6 million (+43 percent) 
• Share of branded products in the adjusted operating profit of the core segments increases to 58 percent
• Outlook for 2014 confirmed

STADA Key Figures

Bad Vilbel, May 8, 2014 –

Despite challenging framework conditions in the two market regions Germany and, in particular, CIS/Eastern Europe, as well as high currency translation expenses recorded in the income statement, STADA Arzneimittel AG had positive business development in the first three months of 2014 within the scope of the expectations of the Executive Board. Group sales as well as all adjusted key earnings figures increased at Group level.
“Overall, we are satisfied with the operational development in the first quarter of the current financial year. We were able to achieve pleasing sales developments in the double-digit percentage range in our two market regions Central Europe as well as Asia & Pacific. As a result of the further expansion of the self-pay patient portfolio, the shift to a high-margin product/country mix and leveraging economies of scale, reported net income was approximately at the level of the previous year – and this despite high currency translation expenses of Euro 13 million after taxes due to the devaluation of the Russian ruble as well as further significant currencies of the market region CIS/Eastern Europe”, comments Hartmut Retzlaff, Chairman of the Executive Board of STADA Arzneimittel AG, on the Group's business development in the reporting period.

Development of sales
Group sales in the first three months of 2014 increased by 7 percent to Euro 507.4 million (1-3/2013: Euro 473.2 million).
Sales of the core segment Generics recorded a slight decline of 1 percent to Euro 299.5 million in the period under review (1-3/2013: Euro 303.4 million). Generics thus contributed 59.0 percent to Group sales (1-3/2013: 64.1 percent). Sales of the core segment Branded Products increased substantially by 22 percent to Euro 196.8 million in the first quarter of 2014 (1-3/2013: Euro 161.7 million). Branded products thereby contributed 38.8 percent to Group sales (1-3/2013: 34.2 percent).

Development of earnings
Reported operating profit decreased by 10 percent in the first three months of 2014 to Euro 63.1 million (1-3/2013: Euro 70.0 million). Reported EBITDA rose slightly by 1 percent to Euro 97.7 million (1-3/2013: Euro 96.6 million). Reported net income was approximately at the same level of the corresponding period of the previous year with Euro 35.0 million (1-3/2013: Euro 34.9 million).
After adjusting the key earnings figures for influences distorting the period comparison resulting from one-time special effects, adjusted operating profit showed growth of 22 percent in the reporting period to Euro 87.6 million (1-3/2013: Euro 71.9 million). Adjusted EBITDA recorded an increase of 17 percent to Euro 114.7 million (1-3/2013: Euro 98.2 million). Net income, adjusted for one-time special effects and non-operational effects from the measurement of derivative financial instruments under financial income and expenses, increased by 43 percent to Euro 52.6 million (1-3/2013: Euro 36.7 million).
The development of both reported and adjusted net income recorded in the first quarter of 2014 benefited substantially from the tax optimization program introduced in the second half of financial year 2013.
The net debt to adjusted EBITDA ratio was 3.1 in the reporting period (1-3/2013: 3.0).

Development of the market regions
The four STADA market regions recorded varying developments in the first three months of the current financial year. Whereas the sales of market region Germany were approximately at the same level of the corresponding period of the previous year, sales of market region Central Europe increased by 15 percent and market region Asia & Pacific increased by 81 percent. In market region CIS/Eastern Europe, sales increased by 12 percent using the exchange rates of the previous year, whereas sales in euro, however, declined by 4 percent due to negative currency effects.

Sales in the market region Central Europe recorded pleasing growth – despite the high basis of comparison in the corresponding period of the previous year and in consideration of the acquisition of the British OTC supplier Thornton & Ross completed in the second half of 2013 – of 15 percent to Euro 229.4 million in the reporting period (1-3/2013: Euro 199.1 million). Sales of the market region thus contributed 45.2 percent to Group sales (1-3/2013: 42.1 percent). Whereas sales in the United Kingdom increased by 137 percent, Switzerland and Austria both reached sales growth in the double-digit percentage range.

In the market region CIS/Eastern Europe, sales in the first three months of 2014 increased by 12 percent applying the exchange rates of the previous year. In euro, however, sales recorded a decline of 4 percent to Euro 130.0 million as a result of negative currency effects (1-3/2013: Euro 135.7 million). Sales achieved in this market region thereby contributed 25.6 percent to Group sales (1-3/2013: 28.7 percent). In Russia, sales rose by 4 percent in the first quarter of 2014 applying the exchange rates of the previous year. As a result of a clearly negative currency effect of the Russian ruble, sales decreased in euro by 13 percent to Euro 78.2 million (1-3/2013: Euro 89.9 million). In Serbia, sales rose in the first three months of 2014 by 12 percent applying the exchange rates of the previous year. In euro, sales increased by 8 percent to Euro 21.6 million as a result of a negative currency effect of the Serbian dinar (1-3/2013: Euro 20.1 million).

In the market region Germany, sales in the reporting period were approximately at the same level of the corresponding period of the previous year with Euro 125.6 million
 (1-3/2013: Euro 126.0 million). This development is primarily attributable to the strong seasonal branded products business of the German sales companies, whereas the sales generated with generics continued to decline. Overall, the market region contributed 24.8 percent to Group sales (1-3/2013: 26.6 percent).

In the market region Asia & Pacific, sales in the first quarter of 2014 increased by 81 percent to Euro 22.4 million (1-3/2013: Euro 12.4 million). This market region’s contribution to Group sales amounted to 4.4 percent (1-3/2013: 2.6 percent). The growth in the market region Asia & Pacific was primarily attributable to the sales increase in Vietnam following the consolidation of STADA Vietnam J.V. Co., Ltd. as a subsidiary. This pleasing development can also be attributed to the initial consolidation as a subsidiary of STADA Pharmaceuticals (Beijing) Ltd. in China.

Development, production and procurement
Research and development costs amounted to Euro 13.9 million in the first three months of the current financial year (1-3/2013: Euro 13.1 million). Worldwide, STADA launched a total of 148 individual products in the individual national markets in the period under review (1-3/2013: 140 product launches).

Outlook
The Executive Board confirms the outlook for financial year 2014 as published on March 24, 2014. According to this, STADA expects slight growth in Group sales, adjusted EBITDA and adjusted net income. For reasons of transparency, the adjustments as from 2014 will also include currency expenses recorded in the income statement from the devaluation of the Russian ruble as well as further significant currencies of the market region CIS/Eastern Europe.
 
STADA Adjustments

 
Additional information for analysts:
STADA Arzneimittel AG / Investor Relations / Stadastraße 2–18 / 61118 Bad Vilbel – Germany / Phone: +49 (0) 6101 603-113 / Fax: +49 (0) 6101 603-506 / e-mail: [email protected]

Additional information for journalists:
STADA Arzneimittel AG / Media Relations / Stadastraße 2–18 / 61118 Bad Vilbel – Germany / Phone: +49 (0) 6101 603-165 / Fax: +49 (0) 6101 603-506 / e-mail: [email protected]

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