UPDATE 2-Zentiva forecasts weak 9-mth profit, shares plunge

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By Marek Petrus

Generic drugmaker Zentiva warned on Tuesday that nine-month earnings would be much weaker than expected, prompting its shares to tumble nearly 16 percent to a 16-month low.

The Czech-based company said it expected net income to fall 32 percent year-on-year to 1.06 billion crowns ($56.77 million) in January-September. Net sales were seen at 11.13 billion crowns, up 13 percent from 9.87 billion a year ago.

Zentiva, one of the largest pharmaceutical firms in central Europe, said consolidation of its Turkish business in the third quarter hurt all margins, while continued underperformance in its home market due to price erosion hampered sales.

Zentiva shares fell as much as 15.8 percent to 990 crowns, a level unseen since end-June 2006. By 0845 GMT, the stock traded 14.6 percent lower at 1,004 crowns.

Nine-month results are due for release on Nov. 5, when the company will give an update on its outlook for the full year.

Before Tuesday's news, analysts at Komercni Banka had forecast a 1.46 billion crown net profit and 11.87 billion in sales, while broking house Wood & Company had expected profit of 1.41 billion crowns and sales of 11.74 billion.

"While we welcome the fact that the company remains open and released a warning ahead of its results, the news is definitely negative," said Erste Bank analyst Vladimira Urbankova.

The company, 25 percent owned by France's Sanofi-Aventis , forecast nine-month earnings before interest and tax (EBIT) of 1.46 billion crowns, down 36 percent year-on-year.

In the first half of this year, Zentiva's net profit fell 6.8 percent year-on-year to 831.3 million crowns but the company forecast an improvement in the second half.

Zentiva said its Romanian business reported a 10 percent drop in nine-month sales. It incurred one-off costs worth about 105 million crowns in the third quarter due to bad debt provisions, raising one-off provisioning costs to 300 million for January-September.

The company said it enjoyed solid growth in most of its markets.

[PRAGUE/Reuters/Finance.cz]