Olaine, November 30, 2017

Sales of Olainfarm in Nine Months Reach 90.4 Million Euros

Unaudited  Consolidated Income Statement of AS Olainfarm for nine months of 2017 shows that during this period the Group made net sales of 90.4 million euros and in terms of sales these have been the best nine months in corporate history.  Sales have increased by 15% compared to nine months of 2016. Net profit of the company in nine months was 6.6 million euros, which represents a reduction by 15% compared to 2016. Major sales markets of AS Olainfarm during this period were Russia, Latvia, Belarus and Ukraine.

AS Olainfarm just had its best third quarter in terms of sales, as company’s sales reached 27.7 million euros, representing an increase by 10%.  During this quarter, the company made a net profit of 0.9 million euros, which represents a reduction by 46% compared to third quarter of 2016. Profit was significantly adversely impacted by forex loss of 0.5 million euros as well as provisions for assets deriving from acquisitions of SIA Klīnika Diamed, NPK Biotest and SIA “Kiwi Cosmetics”.

„This is the year when we are investing considerably in integration of our daughter companies into our group and into expansion of chain our representative offices.  At the same time, the work at developing some products that are new to the company has also been rather intensive, with particular emphasis on several anticancer and antituberculosis preparations. We expect that some first of them might be commercialized in two years from now,” says Valerijs Maligins, Chairman of Board of AS Olainfarm.

In nine months of 2017, sales to all key markets of AS Olainfarm continued growing, except Ukraine, where sales shrunk by 40% compared to nine months of 2016.  Reduction of sales to Ukraine was mainly caused by deteriorating economic situation in Ukraine and falling purchasing power, but also by the fact that some antituberculosis products that previously were sold to Ukraine directly, this year were sold to Ukraine via World Health Organization. The biggest sales increases were achieved in Germany (by 200%) and The Netherlands (by 133%).  In total in nine months of 2017 products of Olainfarm were sold to 48 countries in five continents.

During the reporting period, registration processes were completed in Armenia and Azerbaijan.  Registration processed have been started in Nepal and continued in Turkey, Armenia, Myanmar, Cameroon and Vietnam. Registration of medicines produced by NPK Biotest continue in Belarus.  Parent company itself has submitted one more dossier in Turkey and is soon expected to launch several painkilling an anti-inflammatory medicines. Registration of new product Jogurt ACtio has started in several markets.

Annual meeting of shareholders of A/s “Olainfarm” convened on June 1, 2017 approved operating plan of the Group for 2017.  According to it, sales of the Group in 2017 are planned to be 127 million euros, but the net profit will reach 15.5 million euros.  According to this unaudited report for nine months of 2017, during this period 71% of annual sales target and 43% of annual profit target is met. Taking into account a considerable deviation in schedule to achieving the profit target after the second quarter, the Board decided in September to review profit guidances downwards, setting them at 13.5 million for consolidated profit and 11 million for standalone profit.

Because of worse than expected profitability during the third quarter, the Board has again reviewed the profit guidances downwards, setting it at 9 million euros for consolidated and standalone profit, with a possibility of increasing it to 10 million if the reversion of deferred tax acquired as a result of business combination will be recognized.

 JSC Olainfarm is one of the biggest pharmaceutical companies in Latvia with 45 years of experience in production of medication and chemical and pharmaceutical products. A basic principle of company's operations is to produce reliable and effective top quality products for Latvia and the rest of the world. Products made by the Group are being exported to more than 35 countries of the world, including the Baltics, Russia, other CIS, Europe, Asia, North America and Australia.

Information prepared by:

         Salvis Lapins

         JSC Olainfarm

         Member of the Management Board

         Rupnicu iela 5, Olaine, Latvia, LV 2114

         Phone: +371 6 7013 717

         Fax: +371 6 7013 777

         E-mail: Salvis.Lapins@olainfarm.lv