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Grifols Reports Net Profit Of EUR121.7 Million For Full Year 2008

Grifols, S.A. (Grifols), a Spanish holding company, has reported total revenue of EUR814.3 million for the year-end 2008, up 15.8%, compared with the total revenue in the previous year. It also reported net profit of EUR121.7 million for the year-end 2008, up 38.7%, compared with the net profit in the previous year.

Sales were strong throughout the year. To March 2008 turnover increased 10.9% compared with the previous year, while in the second quarter this increase was 16.8%. The third and fourth quarters saw turnover increase 16.1% and 19.5%, respectively. The global economic slowdown has failed to impact the company’s sales, with annual turnover boosted by growth in all divisions. Turnover in the diagnostic division advanced 7.5% to EUR85.7 million, while the Hospital division recorded a 10.6% rise over the previous year to EUR82.6 million.

Sales at the bioscience division, which represent 74.4% of Grifols’ total turnover, soared nearly 23% to 606.2 MM euros with the group’s main plasma derivatives performing well on price as well as volume: Albumin, intravenous immunoglobulin (IVIG) and factor VIII.

This year the company fulfilled its investment plan for 2008-2012. It opened new plasmapheresis centers in the US, bringing the total to 80 and enabling Grifols to obtain 2.7 MM liters of plasma. This is approximately 21.8% more than in 2007.

The reason for Grifols’ long-standing vertical integration strategy in its business is twofold: it enables the company to control costs and ensures that its plasma meets the highest quality and safety standards. At present, the volume of plasma which Grifols obtains from its own centers meets practically all the fractionating requirements of the group (98%).

These needs, which are rising in line with the amount of plasma obtained, mean greater availability of the finished product to meet the market’s demands.

The gross margin improved notably, up from 44.9% of sales in 2007 to 48.9% in 2008. Operating expenses totalled EUR195.2 million, 23.9% of sales. EBITDA rose 32.8% year on year to EUR236.2 million, representing 29% of sales, while net profit climbed 38.7% to EUR121.7 million.

Despite rising interest rates in the first nine months of the year, financial expenses performed well. Interest rate cuts at the end of the year should have a positive effect from 2009 onwards. In fact, net financial debt closed 2008 at EUR446 million, giving an EBITDA ratio of 1.9x, the same as in 2007. As an indication of the strong balance sheet, the net debt/equity ratio fell to 0.86x in 2008, compared with 0.89x in 2007.

Two-thirds of Grifols’ total debt is long-term, of which EUR350 million correspond to the five-year syndicated loan signed in May 2008. The resources obtained from this loan have been used to pay off the outstanding balance of the EUR225 million syndicated loan signed in 2005 as well as to refinance the short-term dollar lines of credit and partially finance the group’s investment plan.