Recordati slumps despite strong sales and earnings growth

Milan-based Recordati (RECI: MI) was the biggest laggard today, down nearly 6% at 32.68 euros after announcing preliminary 2017 results, which showed consolidated revenues were up but revealed it had nearly doubled its debt over the course of the year to 381.8 million euros ($468.2 million).

The Italian pharma company said that consolidated revenues in 2017 were 1.29 billion euros, up by 11.6% compared to the preceding year. International sales grow by 12.4%.

Earnings before interest, taxes, depreciation and amortization (EBITDA), at 35.3% of sales, were 454.7 million euros, an increase of 22.5% over the preceding year. Operating income, at 31.6% of sales, was 406.5 million euros, an increase of 24.1%. Net income, 22.4% of sales, came in at 288.8 million euros, up 21.6% over 2016.

Given the debt situation Recordati noted that, during the period, dividends were distributed, the acquisition of the marketing rights to the metoprolol based products from AstraZeneca was concluded and three Bayer Consumer Health products were acquired for an overall disbursement of 456.5 million euros.

"During the year just ended significant results were obtained and important transactions concluded for the growth and the reinforcement of our group," commented Andrea Recordati, vice chairman and chief executive, adding: "In January the European Union Commission granted the European marketing authorization for our orphan medicinal product Cystadrops [mercaptamine]. In February we signed an exclusive worldwide licensing agreement with the Meyer Hospital in Florence (Italy) for the development of a treatment for pre-term babies affected by retinopathy of prematurity (ROP). In July we concluded the agreement with AstraZeneca for the acquisition of the European rights to Seloken/Seloken ZOK and Logimax, metoprolol based cardiovascular treatments.