Hungarian drug producer Richter Gedeon said its second-quarter net profit more than doubled on rising sales, especially to Russia and the United States, muted cost growth and a smaller-than-expected loss.
Richter's consolidated quarterly net profit rose 112 percent to 6.17 billion forints ($33.24 million) from 2.92 billion a year earlier and came well above analysts' average forecast for 5.1 billion forints in a recent Reuters survey.
Sales in Russia, the company's biggest market, expanded by 40 percent in dollars compared to a year earlier as the country's economy began to show signs of recovery.
The rouble/euro stabilised in March and market confidence returned as a result, Richter said in its earnings report. Wholesalers and pharmacies filled up their stocks, which allowed the firm to realise substantial sales growth.
But neighbouring Ukraine did not mirror Russia's recovery and sales there continued to fall, albeit at a much slower pace than in the first quarter.
In the United States, sales grew by 79 percent on continued strong sales of generic contraceptive products.
In Hungary, the firm's home market, sales fell by 1 percent as the country's deepening recession took its toll.
Budget austerity measures introduced as of April 1 resulted in lower drug spending, especially among the elderly, Richter said. The domestic economic environment also negatively affected the company's performance.
Hungary's economy is seen shrinking by 6.7 percent this year and growth in not expected to return until 2011.
In the European Union, overall sales dropped slightly as a sharp drop in Poland could not be offset by rising sales elsewhere.
While Richter increased revenues on the back of strong export growth, its costs, both material and operating, grew at a slower pace.
Richter's loss widened by 29 percent to 7.51 billion forints, but analysts had expected this figure to reach or exceed 8 billion forints.
Financial losses widened as Richter booked heavy non-realised exchange rate losses on its outstanding receivables after central Europe's currencies gained sharply versus both the euro and the dollar during the quarter.
(Reporting by Balazs Koranyi)