Innovation and security as the mainstays of Pelion's business
The first half-year of 2014 was dominated by the Pelion Healthcare Group's efforts to streamline its sales processes and provide patients with a better and faster access to the most widely bought medicinal products. The Group was also flexibly responding to the fast-changing market conditions and optimising its processes.
In H1 2014, the Group reported a 2.7% growth in revenue, to almost PLN 3.8bn, and a 1.9% drop in operating expenses. However, the growth in revenue failed to translate into a higher EBITDA, as the combination of reduced regulatory mark-up on reimbursable drugs, expenses incurred to launch a new distribution and logistics centre in Łódź, and a one-off item recognised following the resolution of a court dispute in Lithuania drove down the operating result. The consolidated financial results were also strongly affected by worse-than-expected retail performance. Restoring profitability to the retail business will be a priority for the Group in the coming months.
Challenges faced by the healthcare sector
The rapidly-changing market environment (legislative changes, population ageing, prevalence of lifestyle diseases, emergence of illegal drug distribution channels, and the development of information society) is creating new challenges for companies operating in the healthcare industry. Against this backdrop, Pelion is setting new trends and the directions of change, with innovation being the cornerstone of its business.
Set to meet the growing customer expectations, the Group has spent the past few years implementing tools which help optimise processes across all areas of pharmaceutical distribution, such as fully-automated wholesale warehouses, electronic trade platforms for pharmacies, and e-commerce solutions for customers, including www.doz.pl and the Appteka and Doz mobile applications. The latter enable customers to order pharmaceuticals in a quick and easy way, to be later collected from one of the stationary pharmacies across Poland, to check cheaper generic substitutes, and to use advice of professional pharmacists.
The key project this year is DOZ direct, an advanced logistics IT solution, which provides a CLOSED, TIGHTLY-CONTROLLED AND SECURE system of distribution from the manufacturer to the ultimate consumer. DOZ direct is an innovative online platform for managing the product range, inventory, prices, and pharmacy sales, guaranteeing availability and uninterrupted deliveries of medicinal products.
In Lithuania, the Group also made investment to deploy solutions that help streamline the distribution process. The Group's Lithuanian subsidiary, UAB NFG, opened a state-of-the art pharmaceutical logistics centre near the city of Kaunas, which is among the largest investment projects completed in Lithuania in the last five years. The new facility is equipped with a modern distribution line, which helps to significantly shorten delivery times, guarantees secure, safe and quality drug deliveries to pharmacies and hospitals, and broadens the range of possible new services for manufacturers.
Natura chemist's chain joins the CEPD Group
On August 26th 2014, CEPD N.V. closed the acquisition of Polbita Sp. z o.o., the owner of Natura chemist chain, from Alior Bank S.A. The transaction is conditional on clearance from the President of the Office of Competition and Consumer Protection. The Natura chain, which comprises 258 stores, including 240 proprietary stores and 18 franchises, is the second-largest sales network on the Polish cosmetics market. The company employs nearly 1,500 people. The transaction is a part of a strategy designed to diversify CEPD N.V.’s operations and consolidate its relations with customers from the Health and Beauty segment, and its aim is to consolidate the CEPD N.V. Group's position in the Polish market.
Sights set on further growth
The Group's plan for the coming months is to drive organic growth across business lines and to leverage synergies coming from Pelion's presence along the entire distribution chain.
In wholesale to pharmacies, the Group will be focusing on continued expansion of its market shares, development of services for manufacturers, and implementation of support solutions for independent pharmacies and small chains.
In retail, the primary goal is to restore profitability of the retail business in Poland, further develop the DOZ direct platform, and fully exploit the synergies arising from the acquisition of the chemist business.
The table below presents the H1 2014 financial highlights, along with comparative year-on-year data:
| H1 2014 | H1 2013 | Change (%)* | |
| Revenue (PLNm) | 3,799 | 3,700 | 2.7% |
| EBITDA (PLNm) | 65.3 | 107.7 | -39.3% |
| EBITDA margin (%) | 1.7% | 2.9% | -1.2 p.p. |
| Operating profit (PLNm) | 47.8 | 89.4 | -46.6% |
| Operating margin (%) | 1.3% | 2.4% | -1.1pp |
| Net profit attributable to owners of the parent (PLNm) | 26.5 | 56.6 | -53.2% |
| Net margin (%) | 0.7% | 1.5% | -0.8pp |
| Earnings per share (PLN) | 2.37 | 4.99 | -52.5% |
* Change calculated based on figures in PLN '000
For further information, please contact:
Renata Borkowska-Kubiak
Press Officer for Pelion S.A.
Tel.: (+48 42) 200 79 19
Mobile: (+48) 785 858 991
Email: renata_borkowska-kubiak@pelion.eu
Pelion S.A. has operated on the market for twenty-four years. It began life as a local pharmaceutical wholesaler. In 1998, the Company's shares were floated on the Warsaw Stock Exchange. Proceeds from the initial public offering fuelled the Company’s dynamic growth and allowed it to embark on consolidation of the pharmaceutical wholesale market. Since its flotation, the Company has secured a top position among domestic distributors of medicinal products. Today, Pelion Healthcare Group is one of the largest groups operating in the healthcare markets in Poland and Lithuania. The Company's services cover all market segments (wholesale, retail and sale to hospitals) and are targeted at individual patients, pharmacies, hospitals and manufacturers. As a holding company, Pelion S.A. oversees all areas of the Company’s operations, which are conducted by PGF S.A. and Pharmapoint Sp. z o.o. (wholesale), PGF Urtica Sp. z o.o. (sale to hospitals), CEPD N.V. (retail sale), and Pharmalink Sp. z o.o. (services for manufacturers).
