Corporate

Hikma reports 2017 full year results

London, 14 March 2018 – Hikma Pharmaceuticals PLC (Hikma, Group) (LSE: HIK) (NASDAQ Dubai: HIK) (OTC: HKMPY) (rated Ba1 Moody’s / BB+ S&P, both stable), the multinational generic pharmaceutical company, today reports its preliminary audited results for the year ended 31 December 2017.

2017 financial summary - core

  • Core Group revenue of $1,936 million, down 1% and in constant currency up 1%1, despite challenging market conditions in the US
  • Core2 operating profit of $386 million, down 8% and down 4% in constant currency
  • Core basic earnings per share of 105.0 cents, down 11% and down 8% in constant currency
  • Record cashflow from operations, up 51% to $443 million from $293 million
  • Net debt reduced to $546 million from $697 million and healthy leverage ratios maintained

2017 financial summary - reported

  • Reported Group operating loss of $747 million, down from income of $302 million, primarily due to the impairment of West-Ward Columbus’ intangible assets of $920 million and property plant and equipment of $164 million3
  • Basic loss per share of 351.3 cents, compared to basic earnings per share of 66.5 cents
  • Proposed full year dividend of 34 cents per share, up from 33 cents per share

Strategic update

  • Siggi Olafsson appointed Chief Executive Officer, bringing substantial commercial and operational capabilities and a strong track record of driving performance and delivering growth
  • Enhanced the management teams across our three businesses to drive successful strategy execution, strengthen customer relationships and enhance the efficiency of our R&D program
  • Commenced consolidation of our Generics’ manufacturing facilities and US distribution centres to create further operational efficiencies
  • Reinforced our position as partner of choice in MENA through expanded partnership agreements with key partners, Takeda and Celltrion
  • Launched 44 new compounds across all markets, expanding our global product portfolio
  • Bringing all Hikma companies under a refreshed Hikma corporate brand to drive efficiencies, reduce complexities and mobilise employees to better serve our customers
  • Initiating a new clinical endpoint study with respect to our ANDA submission for generic Advair Diskus®

Said Darwazah, Executive Chairman of Hikma, said:

"We delivered a solid performance in 2017 at a challenging time for our industry, demonstrating the benefit of our diversified business model. Profitability in our Branded business remained stable and our Injectables business was resilient, maintaining strong profitability despite new competitors for our top products and benefiting from our strong market position in the US hospital segment.

The increasingly competitive dynamics of the US market, including intense pricing pressure, had a material impact on our Generics business and, in particular, on West-Ward Columbus. This was further impacted by the delay in approval for our generic version of Advair Diskus®. As a result of these headwinds, we have had to take an impairment related to the West-Ward Columbus business to reflect our updated view of the fair value of this business.

To be more competitive and achieve our ambitious goals, we are making transformational changes across the Group. We recently announced the appointment of Siggi Olafsson as Chief Executive Officer. Siggi is an exceptional leader with extensive experience in the industry. He is the right person to take the business to the next level.

I am confident that the investments we have made across our businesses in 2017 – in our people, our capabilities and our facilities – leave us well positioned to achieve our strategy for growth.”

Siggi Olafsson, Chief Executive Officer of Hikma, said:

Since arriving at Hikma, I can already see the incredible potential of this business and I’m confident that the operational improvements already under way will deliver substantial value to our customers, employees, investors and the wider community.”

Summary financials

Core results

2017

$million

Growth

2016

$million

Constant currency

$

Core revenue

1,936

1%

-1%

1,950

Core operating profit

386

-4%

-8%

419

Core EBITDA4

468

-1%

-5%

493

Core profit attributable to shareholders

252

-5%

-9%

276

Core basic earnings per share (cents)

105.0

-8%

-11%

118.5

Reported results

2017

$million

Growth

2016

$million

Constant currency

$

Revenue

1,936

1%

-1%

1,950

Operating profit/(loss)

-747

-342%

-347%

302

EBITDA

488

7%

3%

473

Profit/(loss) attributable to shareholders

-843

-636%

-644%

155

Basic earnings per share (cents)

-351.3

-620%

-628%

66.5

1 Constant currency numbers in 2017 represent reported 2017 numbers re-stated using average exchange rates in 2016, excluding price increases in the Branded business which resulted from the devaluation of currencies.

2 Core results are presented to show the underlying performance of the Group, excluding the exceptional items and other adjustments set out in Note 4.

3 See Notes 8 and 9.

4 Core results are presented to show the underlying performance of the Group, excluding the exceptional items and other adjustments set out in Note 4. EBITDA is earnings before interest, tax, depreciation, amortisation and the impairment charge.