Krka Group H1 2025 slides: Record sales and profit amid Russian ruble volatility

Introduction & Executive Summary

Krka Group (LJSE:KRK) reported record first-half results for 2025 during its July 24 presentation, with sales exceeding €1 billion for the first time in a half-year period. The Slovenian pharmaceutical company achieved sales of €1,048.5 million, representing a 6% year-over-year increase, while net profit rose 11% to €246.7 million.

The strong performance was bolstered by volume growth of 4% and favorable currency movements, particularly from the Russian ruble, which contributed €42.4 million to the company’s net financial result. Based on these results, Krka has confirmed its full-year 2025 guidance of over €2 billion in sales and approximately €365 million in net profit.

As shown in the following performance highlights chart, Krka has demonstrated consistent growth in both sales and net income over recent years:

Quarterly Performance Highlights

Krka’s first-half 2025 performance was characterized by strong profitability metrics:

• EBITDA margin of 28.9% (up from 28.8% in H1 2024)
• EBIT margin of 24.5% (up from 24.1%)
• Net profit margin of 23.5% (up from 22.5%)
• Return on equity (ROE) of 20.8% (up from 19.3%)
• Return on assets (ROA) of 16.5% (up from 15.3%)

The company’s consolidated income statement reveals a well-managed cost structure, with gross profit increasing 7% year-over-year to €607.4 million, maintaining a gross profit margin of 57.9%.

Operating profit grew 8% to €257 million, while the company’s effective tax rate stood at 17.6%. Basic earnings per share increased 12% to €8.04 compared to €7.20 in the same period last year.

The following operating results chart illustrates Krka’s consistent margin performance:

Regional Sales Analysis

Krka’s growth was geographically diverse, with sales increasing in all regions except Overseas Markets. Eastern Europe remained the company’s largest market, accounting for 35.3% of total sales at €370.4 million, an 11% increase year-over-year.

The regional breakdown of sales is as follows:

• East Europe: €370.4m (+11%)
• Central Europe: €242.5m (+7%)
• West Europe: €187.0m (+2%)
• South-East Europe: €148.2m (+8%)
• Slovenia: €64.4m (+8%)
• Overseas Markets: €33.2m (-16%)

The Russian Federation, Krka’s largest single market, showed particularly strong growth of 12% to €219 million. Other top markets included Poland (€122m, +12%), Ukraine (€50m, +8%), Germany (€47m, -25%), and Romania (€40m, +5%).

The following map provides a comprehensive view of Krka’s global sales performance:

Product Portfolio Performance

Prescription pharmaceuticals (Rx) remained Krka’s core business, representing 84% of total sales at €878.3 million, a 7% increase from the previous year. The company’s diversified portfolio also includes:

• Non-prescription products (OTC): €77.9m (+6%), 7.4% of sales
• Animal health products: €63.4m (+5%), 6.1% of sales
• Health-resort & tourist services: €26.2m (+12%), 2.5% of sales

R&D and Innovation Strategy

Krka continued its commitment to innovation, investing €95 million in research and development during the first half of 2025. The company finalized 11 new marketing authorizations and over 500 marketing authorization procedures.

New products represented 24% of total sales in 2024, up from 22% in 2023, highlighting the company’s successful product development strategy. Krka currently has over 170 products in its development pipeline and employs approximately 800 experts in R&D.

The company emphasized its innovative approach to medicine formulation, including orodispersible tablets, OROS delivery systems, and unique single pill combinations (SPCs). Notably, Krka claims to be the first generic manufacturer globally to offer a triple SPC of perindopril, indapamide, and amlodipine, with 350 patent applications for various innovations.

Financial Analysis and Currency Impact

A significant factor in Krka’s H1 2025 financial performance was the positive impact of foreign exchange movements, particularly the Russian ruble. The company reported a net financial result of €42.4 million, including positive FX differences of €48.1 million, partially offset by derivatives impact of -€9.2 million.

The Russian ruble appreciated 28.7% against the euro from the beginning of the year to the end of June, with its average value 3.2% higher than in the same period last year. This currency movement had a substantial positive impact on Krka’s financial results, as illustrated in the following chart:

Krka’s balance sheet remains robust, with total assets of €3.15 billion as of June 30, 2025, up from €2.85 billion at the end of 2024. The company maintains a strong equity position at 80% of total assets, with minimal debt.

Forward Guidance and Strategic Outlook

Based on its strong first-half performance, Krka has confirmed its full-year 2025 guidance:

• Sales: over €2 billion
• Net income: approximately €365 million
• CAPEX: €150 million (28% growth compared to 2024)

The company expects to maintain sales growth in both value and volume of at least 5% per year, with an average EBITDA margin above 25%. Krka also announced that an update to its Development Strategy for the period 2026-2030 will be released with its Q3 2025 results in November.

Krka continues to deliver strong shareholder returns, with a dividend yield of 8.25% in 2025 and a 10-year CAGR of 14.1% for dividend payments. The company has allocated over €1.35 billion for dividends in the past decade and continues its share buyback program, having repurchased €24 million of treasury shares in H1 2025.

As of June 30, 2025, Krka’s market capitalization stood at €6.1 billion, with a price-to-earnings ratio of 16.11. The company’s shareholder base includes Slovenian individual investors (27%), Slovenian institutional investors (41.7%), state ownership (6.9%), international investors (18.6%), and treasury shares (5.8%).

Despite the strong results presented in the H1 2025 slides, Krka’s stock was trading down 1.2% following the presentation, with the share price at €824, below its 52-week high of €864 but well above its 52-week low of €560.

Full presentation:

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.