Hovione announces that the consolidated sales volume for the fiscal year ended 31st March 2004 amounted to US$75m, representing a growth of 9% over the previous year.

Guy Villax, CEO of Hovione noted that “2003 was an excellent year. In the context of an adverse market environment sales grew and gross margins improved, but more significantly Hovione delivered on its goals in terms of strategy, cost cutting and productivity.

During 2003 the sales evolution to the Innovator segment, to which Hovione supplies R&D and contract manufacturing was in its 3rd year of crisis with FDA approving half the usual number of new pharmaceuticals. On the other hand sales to the Generics segment presented vigorous growth. In terms of geography, our sales remained close to the proportion to the pharmaceutical market sizes with North America accounting for 48%, Europe 22% and Asia 21% – with Japan showing greater than usual growth. Small Pharma and the quality Generic Houses remain the Customers that best benefit from Hovione’s value proposition.

Capital expenditure reached $13m, and the focus remains one of consolidation and of pay-back on the significant investments of the last 4 years: The Technology Transfer Centre in New Jersey, USA; the significant investments in IT and R&D capabilities in Loures and the doubling of the plant capacity and improved environmental protection systems in Macau. Equity and long-term debt remains 68% of our net balance sheet; and the net debt / EBITDA ratio remains at a low 2.2 multiple. Despite the focus on minimizing expense in capital items, Hovione remains keen to invest in process technology whenever this can provide further value to our Customers. During 2003 a $3.3m investment in particle design technology was again evidence of this technology early-adopter mentality that Hovione has demonstrated in its 40 years of pharmaceutical chemistry specialization.

Hovione is now organized by profit centres and has extended its decade old process of continuous improvement to include balance sheet objectives. As a result good management of current assets released $11m over last year’s performance. Sofia Lee, responsible for Finance and Treasury at Hovione commented: “Unfortunately the strength of the Euro reduced Hovione competitiveness: For every 5 centimes of strength vis-a-vis the US $ Hovione loses about $1m of profitability in cash terms. This negative exchange environment together with important start-up-losses from the US operations were a drain on our EBITDA, this reached $18m or 24% of sales – a level we consider wholly unsatisfactory but which is justified under the current circumstances. … The 2005 deadline for the adoption of the IFRS is an issue we solved several years ago”. Hovione’s financial statements have been prepared according to the International Financial Reporting Standards since 2000.

www.hovione.com includes additional information on quality, health, safety and environmental performance.

Hovione is an international group dedicated to the process development and synthesis of APIs (active pharmaceutical ingredients) serving exclusively the pharmaceutical industry. With FDA inspected plants in Europe and the Far East and a Technology Transfer Centre in New Jersey, USA, Hovione is committed to the highest levels of service and quality. Hovione’s capabilities include process chemistry, worldwide regulatory affairs, kilo to multi-ton manufacture of complex multi-step chemistry of APIs under FDA and ICH cGMP quality standards.