Zur Rose Group records 30 percent sales growth in first half of 2018
- Strong growth in Germany with plus 38 percent in local currency terms
- Surge in sales of almost ten percent in home market of Switzerland
- Takeover of OTC market leadership in Germany
- Continuation of expansion strategy, including in new markets
- Growth and profit targets for 2018 confirmed
The Zur Rose Group continued its dynamic performance in the first half of 2018 with an increase in sales of just under 30 percent to CHF 602.7 million. As the largest mail-order pharmacy in Europe, it will continue to promote organic and acquisition-based growth and take advantage of opportunities in the market. With the acquisition of the marketplace platform Promofarma, the Group is bolstering its internationalisation strategy and increasing its technology competence in e-commerce.
The continued growth momentum is clearly reflected in the figures for the first half of the year: Consolidated sales increased by 29.4 percent year-on-year to CHF 602.7 million. In local currency terms, the increase stood at 24.7 percent. As a consequence of the increased marketing expenses, the Group reported an operating result (EBITDA) of minus CHF 8.7 million as planned. This also includes non-recurring exceptional expenses in connection with the acquisitions of around CHF 2.1 million. A net income/(loss) of minus CHF 17.6 million was incurred.
Almost ten percent sales growth in Switzerland - In its home market of Switzerland, the Zur Rose Group posted a significant surge in sales of 9.5 percent to CHF 262.1 million. In the light of the government-mandated price reductions which entered into force at the beginning of the year, this growth is even more positive. The high level of customer orientation and the further development of digital services led to the acquisition of new customers in the doctors' segment (B2B): Zur Rose increased its market share to almost 25 percent in this segment. Sales increased by 7.6 percent. The retail segment (B2C) grew by a significant 12.6 percent. This acceleration in growth was driven in particular by the fast-growing specialty care business and brick-and-mortar business combined with the omni-channel strategy. In June 2018, Zur Rose opened its second shop-in-shop pharmacy at the Claramarkt Basel Migros branch. A location at Limmatplatz in Zurich will be added in November.
Significant expansion of market position in Germany - In Germany, the Zur Rose Group continued its accelerated growth in the first half of the year. Sales in local currency terms altogether increased significantly by 38.4 percent to EUR 291.2 million. The online OTC segment continued to gain in importance and grew organically, clearly outstripping the market as a whole. The mail-order business of the Eurapon and Vitalsana acquisitions also performed very well. Overall, OTC sales in local currency terms rose by 77.7 percent to EUR 157.8 million, now making the Group the clear market leader for OTC drugs in Germany. In the prescription drugs (Rx) segment, sales increased by 9.7 percent in local currency terms, around the same level as the previous year. The number of active customers in Germany increased by 66 percent to over three million in the last 12 months. In the light of ongoing discussions about a ban on the mail-order business in prescription drugs, the Group continues to believe that a ban is not in line with EU law. The German Federal Minister of Health recently announced that he would prefer a fair solution rather than a ban.
Implementation of expansion strategy in new markets - With the takeover of the state-of-the-art e-commerce marketplace Promofarma as announced at the start of August, the Zur Rose Group is driving the digital transformation of its own business. Promofarma is a springboard for the Group's international expansion, both cross-border and through the addition of new partners in other countries, with a capital-efficient business model.
Ongoing consolidation in Germany - The Zur Rose Group will continue to leverage the opportunities presented by consolidation of the largest mail-order market, Germany. In May, it announced the acquisition of apo-rot's mail order business in Hamburg. The pharmacy generated sales of around EUR 100 million in 2017. The closing is expected in the fourth quarter of 2018. The logistics of apo-rot are to be transferred to Heerlen at the end of the year. This measure represents the first step by the Zur Rose Group towards bundling its entire mail-order activities in the German market in Heerlen. As a result of the synergy effects, the management expects a contribution margin of the acquired sales of five to ten percent.
Increase in logistics capacity at Heerlen site - Buoyed by these plans, the Board of Directors of the Zur Rose Group has resolved to expand the logistics infrastructure and construct a new building to adjoin the existing one in Heerlen. The new logistics building covering more than 20,000 square metres will be ready for occupancy in mid 2020. The shipping capacity of the site will accordingly be tripled to a volume of 30 million packages per year. The logistics can be increased in a further expansion phase to a package volume of 50 million. After completion, the mail-order business of Eurapon, Vitalsana and Zur Rose Pharma as well as any other acquired mail-order pharmacies will be processed in Heerlen. Streamlining at one site will enable the Zur Rose Group to scale back logistics costs significantly. The expansion of logistics will set new standards as regards efficiency in the German pharmacy mail-order business.
Outlook - Management has confirmed further double-digit organic sales growth for 2018 and an overall increase of more than 20 percent in local currency terms. At the EBITDA level, a break-even result adjusted for extraordinary expenses is still expected. The Zur Rose Group will continue its long-term growth strategy and achieve further expansion of its strong position in the European drugs mail-order business. To this end it is relying on a high-quality, cost-effective supply of medicines, a high level of customer focus and the further development of digital services. Economies of scale due to the growing size, further automation in logistics and the integration of the acquired companies are paying off systematically and exerting a positive effect on the operating result.
|Sales figures, January to June, in CHF 1,000
|Zur Rose Group
|in local currency
|Segment Germany, in EUR 1,000
1) consolidated as of 1 May 2017
|Further key financials, in CHF 1,000
|Earnings before depreciation and amortisation (EBITDA) adjusted for extraordinary costs
|in % of revenue
|Earnings (EBIT) adjusted for extraordinary costs
|in % of revenue
|Net income / (loss) adjusted for extraordinary costs
|in % of revenue
|Net income / (loss)
|in % of balance sheet total
The half-year report 2018 and presentation are available at www.zurrosegroup.com under "Investors & Media" | "Publications".
At 2 p.m. CET today there will be a telephone conference in English for analysts and the media.
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Conference ID: 63253964#
The associated presentation (without audio) is available at: https://webcasts.eqs.com/zurrose20180815/no-audio
Alternatively, the presentation can be followed via live audio webcast using the following link: https://webcasts.eqs.com/zurrose20180815
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About the Zur Rose Group
Operating under the Zur Rose and DocMorris brands, the Swiss-based Zur Rose Group is Europe's leading online pharmacy and one of Switzerland's foremost wholesale suppliers to medical doctors. Through its business model, it helps to ensure safe, reliable and high-quality pharmaceutical care, while also excelling in developing innovative medicines management services to increase the effectiveness of the medication process. This creation of added value, the strong focus on patients and the commitment to supply medication at low cost for the benefit of payors and patients make the Group an important strategic partner for all healthcare stakeholders.
The Zur Rose Group is headquartered in Frauenfeld, from where it also serves the Swiss market. Customers in Germany and Austria are primarily supplied from Heerlen (NL). Furthermore, the Group holds a majority interest in BlueCare in Winterthur, the leading provider of networking systems in the Swiss healthcare market. Employing more than 1000 people at its various locations, Zur Rose Group generated revenue of CHF 983 million in 2017.
Zur Rose Group AG's shares (Swiss security no. 4261528, ISIN CH0042615283, ticker symbol ROSE) are traded on SIX Swiss Exchange. The corporate bond issued in July 2018 is listed on the SIX Swiss Exchange (Swiss security no. 42146044, ISIN CH0421460442, ticker symbol ZR018). More information at zurrosegroup.com.