2017 financial results of Euroapotheca - increased turnover, a new development strategy and preparation for a leap both in new and the existing markets
The international Northern-European and CEE group of companies Euroapotheca, controlling pharmacy retail chains and wholesale companies in Lithuania, Latvia, Estonia, Poland, Sweden and Ukraine, has successfully completed the year 2017 – it increased its business volume, worked out a new development strategy and laid down foundations for the acquisitions of two pharmacy chains in Sweden and Estonia, which were subsequently completed in Q1 in 2018.
The turnover growth observed across all the markets
In 2017, Euroapotheca group’s turnover amounted to EUR 367.2 million, which was 4 % up on 2016 (EUR 353.1 million) (and with the franchisor-based companies it accounted for EUR 372.8 million , which was 4.5 % up on 2016 (EUR 356.8 million).
In 2017, the group’s net profit amounted to EUR 19.1 million, i.e. 9 % down on 2016, when the group’s net profit was EUR 21.0 million. The lower profit was due to investment costs for development.
The group’s turnover in Lithuania amounted to EUR 239.4 million, which was 3.4 % up on 2016 (EUR 231.6 million). In Latvia, the group’s turnover amounted to EUR 55 million, which was 11.8 % up on 2016 (EUR 49.2 million) In Estonia, the group’s turnover amounted to EUR 31.7 million, which was 5.3 % up on 2016 (EUR 30.1 million) In Poland, the group’s turnover amounted to EUR 40.9 million, which was 0.2% up on 2016 (EUR 40.8 million) In Ukraine, the group’s turnover amounted to EUR 0.7 million, which was 16.7 % up on 2016 (EUR 0.6 million)
Major events – transactions in Sweden and Estonia and double business growth in Q1 2018
Towards the end of 2017, Euroapotheca decided to focus on active strategic development and began to look for new potential acquisitions in the Nordic, Central and Eastern European regions. In the first quarter of 2018, the group started operating in the new Swedish market and took a more solid ground in Estonia. Euroapotheca decided to discontinue its operations in Ukraine and to exit from this market, while focusing instead on the strategic development in other countries in the Nordic and CEE regions.
At the end of 2017, Euroapotheca signed an agreement with the Kingdom of Sweden to acquire the state-controlled company Apoteksgruppen i Sverige Holding AB, which provided franchise services to 186 pharmacies operating under the Apoteksgruppen brand and ran three pharmacies of its own. At the same time, the company signed a contract to acquire 156 pharmacies from private investors and to provide franchising services to 30 independent pharmacies operating under the brand Apoteksgruppen, which until then had franchise services from Apoteksgruppen i Sverige Holding AB. Both transactions were completed by Euroapotheca in Q1 2018, and it became the owner of the fourth largest retail chain in Sweden.
In Q1 2018, Euroapotheca group’s subsidiary Euroapteek OÜ fully completed its transaction with the Finnish company Yliopiston Apteekki OY to acquire the retail chain of 13 pharmacies Ülikooli Apteek and the right to provide all of the franchise services to another 11 franchise pharmacies operating under Ülikooli Apteek brand. Q1 2018 Yet another transaction was also fully completed by the subsidiary Baltfarma OÜ, which acquired from Yliopiston Apteekki OY the pharmaceutical wholesaler Medapta OÜ. Euroapotheca invested more than EUR 300 million for the purpose of the transactions in Sweden and Estonia, and the company’s business more than doubled in these countries at the end of 2017 and, together with their franchise companies, amounted to EUR 396 million (to compare with EUR 372.8 million, together with the franchise companies, in 2017).
Following both acquisitions, at the end of Q1 2018, UAB Europoatheca united the network of 671 pharmacies: in Lithuania – Eurovaistinė (271 privately owned pharmacies), in Sweden – Apoteksgruppen (189 pharmacies, including 159 privately owned and 30 franchise pharmacies), in Poland – Euro-Apteka (81 pharmacies, including 74 privately owned and 7 franchise pharmacies), in Estonia – Euroapteek (73 pharmacies, including 55 privately owned and 18 franchise pharmacies), in Latvia – Euroaptieka (54 privately owned pharmacies), in Ukraine – Euroapteka (4 privately owned pharmacies).
At 31 December 2017, the group united 459 pharmacies: in Lithuania – Eurovaistinė (271 privately owned pharmacies), in Poland – Euro-Apteka (81 pharmacies, including 74 privately owned and 7 franchise pharmacies), in Estonia – Euroapteek (49 pharmacies, including 42 privately owned and 7 franchise pharmacies), in Latvia – Euroaptieka (54 privately owned pharmacies), in Ukraine – Euroapteka (4 privately owned pharmacies).
The number of employees goes up to over 3.8 thousand
The group companies employed at 31 December 2017 over 3 thousand employees, to compare with 2.9 thousand at 31 December 2016. Following the completion of the acquisition transactions in Sweden and Estonia in Q1 2018, the number of employees went up to 3.8 thousand.
Euroapotheca is part of the international group of companies UAB Vilniaus prekyba, one of the largest groups of retail trade companies in the Baltic States and the Central and Eastern Europe.
Raimonda Kižienė, CEO and Chairman of the Board of UAB Euroapotheca:
In 2017, Euroapotheca operations were subject to major transformations: we adopted a new group development strategy, and we managed to successfully complete, over a short period of time, the strategic acquisitions launched last year in Sweden and Estonia. Our double growth achieved is not our final goal, however. We have no intentions to miss the current opportunities that we see for growth in the Northern and CEE region. We will continue the strategic development as our priority in 2018. We are looking for new development opportunities in both our existing and the new markets, while also taking best efforts to maintain our presence and reinforce business in the existing markets. This year, we will be paying a particular attention to the integration of the acquired business into our group business systems.
The pharmacy business is not all about opportunities but it is also about the challenges that go hand in hand, particularly as regards business regulation in many markets of our operation, which has been increasing and becoming ever more difficult to predict. On the other hand, new opportunities are provided by the growing trend in customer focus on a healthy lifestyle and illness prevention as well as beauty products, which give us reasons to believe that our business will successfully continue in the future and we will retain and strengthen our presence in the markets where we have been long operating or have just started our operations.
We see great potential in the e-commerce – we are leaders in the pharmacy segment in Lithuania, and in the near future, we are going to offer on-line pharmacy opportunities in our other markets too. Franchise business also looks very promising. We have acquired a well-running franchise business in Sweden, and we hope that we will be able to successfully mainstream the Swedish experience across our business in our other markets.