Double-Digit Growth Despite the Pandemic-Induced Crisis

In the first half of the year, JGL’s pharmaceutical business experienced a trend of continued growth in revenue and operational profitability. According to preliminary consolidated results, JGL Pharma reached a record operating revenue of HRK 355m, which translates to a 16% growth rate, in challenging business conditions caused by the Covid-19 pandemic, which led to a sharp decline in demand in the second quarter. However, even in these circumstances, JGL’ growth reached double digits, surpassing market growth. This makes JGL’s performance all the more impressive, since there was a decline in sales in Russia and Croatia, two of its biggest markets.

"These are excellent results that speak to our efforts to develop a strong and growing business in Ukraine, Kazakhstan, Bosnia and Herzegovina, Belarus and B2B markets, which enabled us to reduce our dependence on individual markets. Russia remains our largest market, with 33% of the revenue realised in the first half of the current year, but this is a step-down from last year’s 39%. Nevertheless, we are particularly excited about the 87% growth rate in the B2B business. It reinforces JGL’s competitiveness on the European market and secures a significant new revenue source, where we won’t be faced by a foreign exchange risk”, says Mislav Vučić, JGL’s Chief Executive Officer. All of the company’s key brands have achieved double-digit growth, from Vizol S, with a growth rate of over 70%, to Aqua Maris, Meralys, Aknekutan and Folacin, he adds.

We have continued working towards reducing debt and indebtedness despite the financial shock caused by the pandemic. At the end of the first half of the year, the indebtedness factor (net debt/EBITDA) was reduced from 2.8x, where it stood in late 2019, to 2.2x.

"Given that we experienced a strong revenue growth, and managed to control our expenditure, we increased our operating profitability (EBITDA margin) in the first half of 2020, from 13.5% to 17.7%. A 4 pp increase in profitability is an outstanding achievement”, says Vučić, adding that during the same period, the company felt the negative effects of foreign exchange differences, which amounted to HRK 15.5m. Thanks to its great sales performance and efficient expense management, the company was able to offset the loss almost entirely.

JGL will continue implementing the same business strategy in the second half of the year as well, including a more rapid and focused adjustment to meet customer needs, and to sales and exports, as well as further expansion of cooperation in the key therapeutic segments of ophthalmology and otorhinolaryngology.

Our investments will largely be directed at JGL’s Aqua Maris and Meralys portfolios, aimed at prevention and hygiene in the coming season of increased cold, flu and viral activity. Since the new circumstances and working conditions are forcing all of us to spend more time in closed, air-conditioned spaces, in front of various screens, we are also expecting an increase in demand for high-quality preservative-free Vizol S solutions to treat symptoms of dry and red eyes.

The Group’s operating revenue, including the pharmacy segment led by Pablo HI, and the dietetics and cosmetics segment headed by our subsidiary Adrialab, also grew by 16% in the first half of 2020, reaching HRK 453m. The operating profit (EBITDA) of JGL Group is HRK 71m, which is 54% higher than the first six months of last year, while profit before tax is HRK 28m.

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