Roche to pay further SF1.2 bn in vitamins case
months of the year, the Roche group, which has recently sold its
vitamins business to DSM, also announced that a further SF1.2
billion would have to be set aside for the vitamins case, still
pending after the company's involvement in a price-fixing cartel.
The Roche Group said it recorded sales of SF21.7 billion (€14.8bn) in the first nine months of 2002 at the same time announcing that it had to set aside additional provisions of SF1.2 billion (€820m) for the vitamin price-fixing case still being resolved.
The group, which recently announced the sale of its vitamins and fine chemicals division to DSM, said combined sales revenues from its core pharmaceuticals and diagnostics businesses totalled SF19.3 billion, a growth rate of 7 per cent in local currencies. However, expressed in local currencies, sales at the Vitamins and Fine Chemicals division held steady at last year's levels, in what Roche called "still a difficult economic climate." While sales were down 5 per cent in Swiss franc terms, sales volumes grew significantly, added the company.
The positive growth trend in North America continued, and in Europe the division reversed the downturn seen earlier this year. Sales growth was especially robust in China, according to the group.
The division's innovative product ideas for the functional food segment have attracted considerable interest. These include a new concentrated PUFA formulation, launched this year, and the division's lycopene, lutein and natural-source vitamin E products, which continue to be successful. Sales in the animal nutrition segment also increased. To offset pricing pressures in its markets, the division is proceeding as planned with its current programmes to reorganise its manufacturing operations and marketing infrastructure.
Roche said that negotiations on the details of a final purchase agreement for the sale to DSM are proceeding on schedule, and it expects to close the transaction in the first quarter of 2003. As announced, present and future liabilities arising from the vitamin case will remain with Roche.
In a statement the group said: "Roche is making every effort to settle all outstanding litigation in the vitamin case as soon as possible. Out of court settlements have been concluded this year with a number of direct customers in the United States. Based on intensive negotiations with direct customers, and in light of legal developments in the United States and other countries, Roche has set aside additional provisions of 1.2 billion Swiss francs to cover liabilities from the vitamin case."
Franz B. Humer, chairman of the board of directors and CEO, added: "Our results for the first nine months show that our core pharmaceuticals and diagnostics businesses are right on track. There is no question that the vitamin case is a difficult legacy from the 1980s and 90s. Following intensive negotiations, we are moving toward settling the lawsuits that are still outstanding in the United States. The fact that we have had to record additional provisions of 1.2 billion Swiss francs is all the more unfortunate, as it casts a shadow over Roche's major strategic and operational achievements."
The group said that the outlook remains unchanged however and reaffirmed its earlier forecasts regarding business performance in the current year. It expects consolidated sales growth for the full year to be in the mid- to high-single-digit range in local currencies, and it anticipates further improvements in its operating profit and EBITDA margins. Full-year net financial income for 2002 is expected to be roughly equal to the figure for the first half of the year.