Bachem 2004 results with positive outlook for 2005

12-Apr-2005

The Bachem Group announced results for fiscal year 2004 and provided a forecast for 2005. Sales increased by 5.0 percent in local currencies in 2004 as a result of sales growth of 13.9 percent in the US market and constant sales in Europe. generics sales grew by 22.5 percent, driven primarily by Peptide generics. After two years of decreasing sales, research ingredients improved and grew by 4.5 percent in local currencies. In view of the continuing weakness of the US dollar, sales in Swiss francs increased only modestly at 2.2 percent, from CHF 144.6 million to CHF 147.8 million.

While margins were approximately maintained in local markets for the core peptide business, including peptide generics, non-peptide generics faced decreasing margins due to changes in product mix, investments in increased production capacity and price pressure for an important product. Results were further affected by the continued US dollar weakness. Accordingly, operating income was at CHF 42.2 million, down 8.4 percent (in local currencies) as compared to the previous reporting period. EBIT margin declined to 28.6 percent, and net income decreased by 13.4 percent compared to 2003 at CHF 32.3 million. Although the financial result was positive again at CHF 1.9 million, it could not fully compensate for increased expenditures of CHF 2.1 million on Pevion Biotech, the Bachem joint venture with Berna Biotech for the development of peptide-based vaccines.

Although economic development in Europe was lagging behind the US at the beginning of 2005, Bachem expects significant growth for the current year, with accelerating momentum during the second half of the year. A strong presence in the US and the start of commercialization of Symlin, the new anti-diabetic drug from Amylin Pharmaceuticals for which Bachem provides the active ingredient, as well as various other projects showing promising developments, indicate another substantial increase in market sales. Regulatory approvals are pending for four other products, while expanded production capabilities at Sochinaz and custom synthesis activities at the new center of excellence in the UK provide additional opportunities for broadening market penetration. Also, sales of an important product should recover, after de-stocking by a client ceased earlier than expected. Overall, Bachem forecasts double-digit sales growth for 2005, with over-proportional development of operational and net income.

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