2004 Nine Months and 3 rd Qtr Financials Conference Call, 27 October 2004
Operational highlights first nine months 2004 first nine months 2004 Operational highlights • Pharmaceutical sales up 5.9%, or 10.5% excluding Sophartex • International pharmaceutical sales up 16.0% • Lercanidipine sales up 30.4% • EBIT up 15.3% and net income up 34.0% • New product licenses • $ 100 million funding from U.S. private placement 1
First nine months composition of sales First nine months composition of sales 2003 2004 Change % (million euro) 308.0 326.1 PHARMACEUTICALS 5.9% 86.4% 89.7% PHARMACEUTICAL 48.6 37.3 (23.1)% CHEMICALS 13.6% 10.3% 356.6 363.4 1.9% TOTAL 100.0% 100.0% 158.6 164.8 ITALY 3.9% 44.5% 45.4% 198.0 198.6 INTERNATIONAL 0.3% 55.5% 54.6% 2
Sources of growth Sources of growth (% change, first nine months 2004 Volume Total Price Exchange over first nine months 2003) PHARMACEUTICALS 12.8 % (1.9) % (0.4) % 10.5 % excluding Sophartex (64.0) % - - (64.0) % SOPHARTEX PHARMACEUTICAL (19.4) % (0.7) % (3.0) % (23.1) % CHEMICALS TOTAL CHANGE 4.2 % (1.6) % (0.7) % 1.9 % 3
First nine months composition of pharmaceutical sales First nine months composition of pharmaceutical sales (million euro) 2003 2004 Change % 160.2 Pharmaceuticals Italy 151.8 5.6% 13.3% 74.1 65.4 Pharmaceuticals France 18.0 15.8 13.7% Pharmaceuticals Spain 66.9 19.7% 55.8 International licensees (64.0)% 6.9 19.2 Sophartex * 326.1 5.9% 308.0 TOTAL PHARMACEUTICALS 319.2 10.5% Excluding Sophartex 288.9 * Sold in April and consolidated only in 1Q 2004 4
Breakdown of first nine months 2004 pharmaceutical sales Breakdown of first nine months 2004 pharmaceutical sales International licensees Spain 21% 5% Sophartex France 2% 23% Italy 49% 5
First nine months lercanidipine sales First nine months lercanidipine sales 2003 2004 Change % (million euro) 24.3 28.9 19.3% Italy 10.5 58.8% 16.8 France 3.2 3.6 12.2% Spain 38.0 49.3 DIRECT SALES 29.7% 57.0% 56.7% 28.6 SALES TO LICENSEES 37.6 31.4% 43.0% 43.3% 66.6 86.9 TOTAL LERCANIDIPINE 30.4% 100.0% 100.0% SALES 6
Main products Main products Breakdown of 12 months pharmaceutical sales at September 2004 (€ 442 m) Zanidip (lercanidipine) 25% 11% Elopram/Entact (citalopram/es) 8% Peptazol/Ulcotenal (pantoprazole) Other Products 4% Tora-Dol (ketorolac) Main 22% 4% Hexa line (biclotimol) Products Exomuc (acetylcysteine) 3% 3% Isocef (ceftibuten) 3% Neo Codion (codeine based cough mix.) 2% Lomexin (fenticonazole) OTC 5% Other revenue 4% 2% Urispas (flavoxate) 2% Acequin/Acequide (quinapril) 2% Diezime (cefodizime) 7
First nine months results First nine months results 2003 2004 Change % (million euro) Net Sales 356.6 363.4 1.9% Gross Profit 209.2 226.7 8.4% as % of sales 58.6% 62.4% Selling Expenses 109.0 117.2 7.6% as % of sales 30.5% 32.3% 24.9 26.7 R&D Expenses 7.5% 7.3% 7.0% as % of sales EBITDA 76.8 80.9 5.4% as % of sales 21.5% 22.3% EBIT 56.0 64.6 15.3% as % of sales 15.7% 17.8% Net Income 30.0 40.2 34.0% as % of sales 8.4% 11.1% 8
First nine months EBIT by business area First nine months EBIT by business area 2003 2004 Change % (million euro) 59.1 63.6 PHARMACEUTICALS 7.5% 19.2% 19.5% as % of sales (3.1) PHARMACEUTICAL CHEMICALS 1.0 n.s. (5.5)% 2.2% as % of sales* TOTAL EBIT 56.0 64.6 15.3% 15.7% as % of sales 17.8% * Including inter-company sales 9
Third quarter results Third quarter results 3Q 2003 3Q 2004 Change % (million euro) Net Sales 109.5 111.1 1.5% Gross Profit 64.6 68.2 5.6% as % of sales 59.0% 61.4% Selling Expenses 31.6 32.8 3.9% as % of sales 28.8% 29.5% 7.8 8.6 R&D Expenses 10.9% 7.7% 7.1% as % of sales EBITDA 25.7 26.4 2.8% as % of sales 23.5% 23.8% EBIT 18.9 21.4 13.0% as % of sales 17.3% 19.3% Net Income 10.1 12.8 25.9% as % of sales 9.3% 11.5% 10
Third quarter EBIT by business area Third quarter EBIT by business area 3Q 2003 3Q 2004 Change % (million euro) 20.2 21.4 PHARMACEUTICALS 5.9% 21.5% 21.4% as % of sales (1.3) PHARMACEUTICAL CHEMICALS 0 n.s. (7.2)% (0.2)% as % of sales* TOTAL EBIT 18.9 21.4 13.0% 17.3% as % of sales 19.3% * Including inter-company sales 11
Capital employed Capital employed (million euro) 31 December 2003 30 September 2004 21.4 Net working capital 47.1 for operations 71.7 Net non-current 55.4 assets Net debt or cash 251.6 227.9 177.6 Shareholders’ 149.1 equity Capital employed: 249.3 Capital employed: 204.5 12
First nine months cash flow First nine months cash flow 2004 2003 (million euro) Net income 30.0 40.2 Depreciation of fixed assets 12.4 9.3 Amortization of intangible assets 7.0 8.3 Cash Flow from Operations 50.7 56.5 Change in working capital 14.4 (2.9) 1.5 Changes in non-current items (5.3) Net investments in fixed assets (11.7) 4.8 Net investments in intangible assets (3.7) (3.8) 33.9 Free Cash Flow 66.6 Dividend paid (18.3) (18.4) - Purchase of treasury stock (2.9) 13
Statements contained in this presentation, other than historical facts, are “forward facts, are “forward- -looking statements” (as such term is looking statements” (as such term is Statements contained in this presentation, other than historical defined in the Private Securities Litigation Reform Act of 1995). These statements are based on currently available defined in the Private Securities Litigation Reform Act of 1995) . These statements are based on currently available information, on current best estimates, and on assumptions believed to be reasonable. This information, these estimates ved to be reasonable. This information, these estimates information, on current best estimates, and on assumptions belie and assumptions may prove to be incomplete or erroneous, and involve numerous risks and uncertainties, beyond the olve numerous risks and uncertainties, beyond the and assumptions may prove to be incomplete or erroneous, and inv Company’s control. Hence, actual results may differ materially from those expressed or implied by such forward Company’s control. Hence, actual results may differ materially from those expressed or implied by such forward- -looking looking statements. statements. All mentions and descriptions of Recordati products are intended solely as information on the general nature of the All mentions and descriptions of Recordati products are intended solely as information on the general nature of the company’s activities and are not intended to indicate the advisability of administering any product in any particular company’s activities and are not intended to indicate the advisa bility of administering any product in any particular instance. instance. Recordati, established in 1926, is a European pharmaceutical group, listed on the Italian Stock Exchange (Reuters RECI.MI, up, listed on the Italian Stock Exchange (Reuters RECI.MI, Recordati, established in 1926, is a European pharmaceutical gro Bloomberg REC IM, ISIN IT 0003074447), dedicated to the research, development, manufacturing and marketing of Bloomberg REC IM, ISIN IT 0003074447), dedicated to the research , development, manufacturing and marketing of pharmaceuticals and pharmaceutical chemicals, with headquarters in Milan, Italy and operating subsidiaries in France, in Milan, Italy and operating subsidiaries in France, pharmaceuticals and pharmaceutical chemicals, with headquarters Ireland, Portugal, Spain, Switzerland and the United States. Ireland, Portugal, Spain, Switzerland and the United States. Contact Information Contact Information Offices: Investor Relations: Website: Offices: Investor Relations: Website: Recordati S.p.A. Marianne Tatschke www.recordati.com Recordati S.p.A. Marianne Tatschke www.recordati.com Via M. Civitali 1 Via M. Civitali 1 +39 02 48787 393 +39 02 48787 393 20148 Milano 20148 Milano tatschke.m@recordati.it tatschke.m@recordati.it Italy Italy 14
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