Bloomberg News

Celesio Cuts Forecast, Considers Sale of Units; CFO Leaves

October 26, 2011

(Updates with closing stock price in sixth paragraph.)

Oct. 26 (Bloomberg) -- Celesio AG, Europe’s largest drug wholesaler, reduced its 2011 profit forecast for the second time this year, citing increased regulation in the U.K. and competition in France and Germany.

Celesio may sell units that handle logistics and sales and marketing for drugmakers, and will renew its focus on drug wholesaling, the Stuttgart, Germany-based company said in a statement today. Chief Financial Officer Christian Holzherr, 48, and Michael Lonsert, who oversees the logistics and marketing division, are leaving the company, Celesio said.

Chief Executive Officer Markus Pinger is overhauling the company after joining Aug. 15 from Beiersdorf AG. Celesio shares have fallen 41 percent this year, and on June 17 they plunged the most since at least 1996 after the company said profit may drop more than forecast as government measures across Europe and competition in Germany hurt results.

“The current earnings situation of Celesio forced us into quick and decisive action,” Pinger said in the statement. “We therefore very promptly defined the cornerstones and guidelines for a strategic realignment of Celesio. We will make these concrete in the coming weeks and months.”

Ebitda Forecast

Earnings before interest, tax, depreciation and amortization will be at least 575 million euros ($801 million) this year before one-time expenditures, compared with a June 17 forecast for Ebitda of about 600 million euros, Celesio said in a separate statement.

Celesio rose 0.6 percent to 11 euros in Frankfurt trading, giving the company a market value of 1.87 billion euros.

Celesio also will begin an “Operational Excellence Program” designed to reduce costs through company-wide purchasing and by stopping projects that have high start-up losses. One-time expenses of as much as 100 million euros for the program will depress earnings this year, Celesio said. The plan will lead to an improvement in earnings in 2012, it said.

“The magnitude of one-time costs is significant,” Oliver Reinberg, an analyst for CA Cheuvreux in Frankfurt, wrote in a report today. “However, we believe this could be a turning point with a new management that appears much more aggressive on costs.” He has an “outperform” rating on the stock.

Celesio will consider selling Movianto, which offers contract logistics services to drugmakers, and Pharmexx, which provides sales and marketing, the company said.

Third-quarter Ebitda was about 140 million euros, the company said. Revenue declined “slightly” in the first nine months of the year, it said. Celesio is scheduled to publish third-quarter earnings on Nov. 11.

--Editors: Tom Lavell, Jerrold Colten

To contact the reporter on this story: Phil Serafino in Paris at pserafino@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net


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