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Krka monitors situation in Ukraine closely, expects no long-term effects

Novo Mesto, 17 March - Drug company Krka, which has significant exposure to the Russian and Ukrainian markets, said on Thursday it could not yet assess the impact of the current situation in these two countries on its operations in 2022. But it stressed it had a strong capital structure, robust money flow and no financial debt, so long-term operations were not at risk.

Novo mesto
Pharma company Krka logo
Photo: Rasto Božič/STA
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According to unaudited consolidated business results, Krka generated EUR 1.57 billion in revenue in 2021, up 2% from 2020. Net profit was up 7% to EUR 308.2 million, which is slightly more than what was reported in a preliminary report at the end of January.

The results in 2021 were not affected by the war in Ukraine and the impact on the 2022 results could not yet be assessed. Any changes to the projections for 2022 will be presented when reliable short- and long-term assessments of the consequences of the war will be possible, Krka said.

Krka is active in Ukraine and Russia through its three subsidiaries and the parent company Krka Novo Mesto.

TOV Krka Ukraine, which deals only with marketing and has no production facilities, is based in Kyiv, and Krka-Rus OOO, a drug manufacturer, is based in the town of Istra near Moscow, while its marketing and sales offices are in Moscow.

Russia is Krka's largest single market, where the group generated EUR 333 million in sales last year, which is 21.3% of its total sales.

In Ukraine, which was the third largest market for Krka in 2021, sales reached EUR 96 million, which is 6.2% of the group's total sales.

In Ukraine, all measures have been taken to preserve the health and security of the staff, and pharmaceutical products are being shipped in line with expectations given the circumstances, Krka said.

Sale in the first quarter of 2022 has been estimated at EUR 25.9 million, up from EUR 22 million in the same period last year.

In Russia, all activities are running without any major disruptions, although some delays are being recorded in transport.

Krka is selling its products in the Russian market in the local currency so it is exposed to some risks given the current depreciation of the ruble. The estimated sale in the first quarter was slightly up to EUR 79.9 million.

The key short-term risks for Krka are the current situation in Ukraine, economic sanctions, volatility and depreciation of the ruble and credit risks.

Medicines are not subject to sanctions - neither in exports nor imports. Krka estimates that other markets and sales regions will not be directly affected by the situation, while indirect impact on the other markets of the eastern Europe region will depend on the duration of the war.

Krka has been present in the markets of eastern Europe for more than 50 years and has been exposed to many challenges, which have in the long term further enhanced its market share, Krka said in a press release.

It added that its robust business operations were based on a system of vertical integration, which ensured resilience against external shocks and responsiveness to the rapidly changing market situation.

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© STA, 2022