Meda AB (publ) – 2010 year-end report

• Meda exceeds published full-year forecast for 2010.

• Group sales reach SEK 11,571 million (13,178). Currency effects and generic competition for the Astelin and Optivar products are the most important reasons for decreased sales compared with last year.

• EBITDA amounts to SEK 4,306 million (4,387), corresponding to a 37.2% margin (33.3).

• EBITDA, excluding non-recurring effects[1] and currency effects, is SEK 4,432 million (4,518), thus yielding a 35.3% margin (34.3).

• Operating profit amounts to SEK 2,529 million (2,902).

• Profit after tax totals SEK 1,428 million (1,537).

• Earnings per share reaches SEK 4.72 (5.09).

• Cash earnings per share reaches SEK 8.15 (9.95).

• Board of directors proposes doubling dividend per share to SEK 2.00 (1.00).

• Integration of Alaven is complete.
  
  

Highlights

Integration of Alaven and US restructuring complete

• A new organizational structure is in operation from January 2011. The structure puts increased focus on specialist products using a streamlined organization.

• Synergy effects in 2011 are estimated to exceed USD 50 million.

• Non-recurring restructuring costs had a SEK 182 million impact on Q4 results. No further restructuring costs related to this acquisition and restructuring are expected.

Meda exceeded its full-year forecast for 2010

• In the Q3 2010 interim report, Meda published the following forecast for full-year 2010 (excluding restructuring costs related to the Alaven acquisition):

                 "The Meda Group expects to achieve sales of about SEK 11,400 million and an EBITDA of about SEK 4,400 million.” 

• The outcome comparable to the forecast was sales of SEK 11,571 million and EBITDA of SEK 4,488 million (recorded EBITDA of SEK 4,306 million plus restructuring costs related to the acquisition of Alaven of SEK 182 million).

Proposed dividend per share of SEK 2.00 (1.00)

• The board of directors proposes doubling dividend per share to SEK 2.00 (1.00).

• The proposed dividend means close to one-fourth of free cash flow for the year would be distributed to shareholders.

• Yield would double to approx. 4 percent (calculated with current share price).

• It is the board’s assessment that the company’s strong cash flow allows its growth ambitions to be realized in parallel with the higher dividend.

CEO'S COMMENTS 

As I predicted and communicated last year, fiscal 2010 was somewhat of an off-year for company growth. Major shifts between our key currencies, price reductions on certain European markets, and generic competition for Astelin and Optivar in the US contributed to lower sales, SEK 11,571 million (13,178). However, excluding these effects underlying growth in 2010 reached about 2-3 percent.

To counteract reduced sales, a conscious effort has been made to streamline day-to-day operations. The EBITDA margin (excluding non-recurring effects) has therefore remained high: 35.2 percent (34.3).

In all other ways, however, 2010 has been anything other than an off-year.  I would rather characterize the year past as a very eventful year.

Meda's pipeline has been further strengthened, and several products have made great headway during the year such as the azelastine–fluticasone combination product (for treatment of allergic rhinitis), flupirtine (treatment of fibromyalgia), and retigabine/ezogabine (treatment of epilepsy).

Meda's focus on growth markets, such as Russia, Turkey, Poland, and Mexico, has also shown excellent results in 2010 with an average increase in sales of more than 20 percent.

We continue to make a conscious investment in OTC products. From having been a marginal part of operations three years ago, Meda's portfolio of OTC products has expanded to about SEK 2 billion in 2010.

Moving forward

In 2010, expired patents for Astelin and Optivar made a mark on sales figures and earnings. Now as fiscal 2011 is well underway, it is apparent that the situation is completely different. Meda has gathered its energies to continue expanding – but at a much lower future risk. Partly, its growing product portfolio minimizes dependence on one or two larger products, and partly the expanding OTC portfolio lacks any future patent risk. The lower risk level can be illustrated with an example: at the end of 2010, Meda's single largest product was responsible for only seven percent of sales, and its top ten products for about one-third of all sales.

In Meda's ongoing growth, these aspects will be given priority:

• Meda has a strong cash flow, which paves the way for acquisitions and partnerships of companies and products. Already today Meda has sales in more than 120 countries and own marketing organizations in 50 countries, which gives it effective geographic coverage of North America and Europe. This makes us an attractive partner that can act quickly when the right business opportunity presents itself.
• Investments on growth markets continue with the ambition to establish new operations on specific selected markets, mainly in Asia and South America.
• Meda has a pipeline of new products that are close to market. These products will be used to the best of their advantage, while the company's pipeline is widened with new, interesting products.

Anders Lönner

Group President and CEO

[1] Excluding non-recurring revenue of SEK 429 million in Q2 2010 and restructuring costs of SEK 197 million in Q4 2010. Excluding restructuring costs of SEK 131 million in Q4 2009.

For more information, contact:

Anders Larnholt                                                                             ph: 46 8 630 1962 

Vice President Corporate Development & IR                                   46 709-458 878

The company’s auditors did not review this year-end report.