Revenue and net sales in the first six months of 2020 reached EUR 2 608 million and EUR 2 491 million, both +12%, +9% CER( )or +10% at CER and adjusted for divestitures respectively. Net sales before "designated hedging reclassified to net sales" (- EUR 51 million in H1 2019 / - EUR 9 million in HY 2020) were up by 10% (+9% CER). This growth was driven by the continued positive and resilient performance of UCB's product portfolio. Royalty income and fees increased to EUR 38 million from EUR 33 million. Other revenue increased to EUR 79 million from EUR 71 million.
Gross profit increased to EUR 1 925 million in-line with topline growth and reflecting a stable gross margin of 74%.
Operating expenses reached EUR 1 311 million (+14%; +13% CER) driven by
-- 13% higher marketing and selling expenses of EUR 569 million - due to launches and prelaunch activities: Cimzia() in non-radiographic axial spondyloarthritis in the U.S. and the launches in China and Japan, Nayzilam() in the U.S., Evenity() in Europe as well as launch preparations for bimekizumab for the treatment of psoriasis; -- 21% higher research and development expenses of EUR 689 million which include the first time R&D expenses for the Ra Pharma development program, the termination costs (EUR 38 million) in connection with the termination of the project padsevonil in focal onset seizures as well as high investments in UCB's progressing clinical pipeline encompassing five late stage assets. The R&D ratio reached 26% in the first six months of 2020 after 24% in HY 2020. -- 2% lower general and administrative expenses of EUR 94 million, also reflecting lower costs due to COVID-19 pandemic and including a donation of EUR?3?million in connection with COVID-19 pandemic. -- other operating income of EUR 41 million driven by the collaboration with Amgen for the commercialization of Evenity().
This resulted in a stable operating expense ratio (in relation to revenue) of 50%.
Underlying profitability - adjusted (recurring) EBITDA reached EUR 783 million after EUR 724 million (+8%; +0% CER) driven by continued revenue growth and increased operating expenses, reflecting the investments into the future of UCB, namely into product launches and clinical development. The adjusted (recurring) EBITDA ratio for the first six months of 2020 (in % of revenue) reached 30%, after 31% in 2019. In compliance with the ESMA Alternative Performance Measures guidelines, "recurring EBITDA" is renamed into "adjusted EBITDA". The calculation methodology remains unchanged.
Other expenses were EUR 95 million - due to restructuring expenses and fees related to the acquisition of Ra Pharma and Engage Therapeutics - after an income of EUR 27 million in 2019.
Net financial expenses increased to EUR 61 million from EUR 53 million, due to the debt financing of the Ra Pharma acquisition.
Income taxexpenses were EUR 70 million compared to EUR 108 million in June 2019. The average effective tax rate was 15% compared to 20% in the same period of last year, but in line with the 2019 full year effective tax rate.
Driven by "other expenses" Profit of the Group amounted to EUR 388 million (after EUR 437 million), of which EUR 363 million is attributable to UCB shareholders and EUR 25 million (after EUR 26 million) to non-controlling interests.
Core earnings per share, which reflect profit attributable to UCB shareholders, adjusted for the after-tax impact of one-time expenses, the financial one-offs, the after-tax contribution from discontinued operations and the net amortization of intangibles linked to sales, reached EUR 2.77 based on 189 million weighted average shares outstanding after EUR 2.42 based on 187 million weighted average shares outstanding.
Outlook 2020 confirmed - UCB confirms its expectations for 2020 revenue to reach approximately EUR 5.05 - 5.15 billion, adjusted (recurring) EBITDA in the range of 26 - 27% of revenue and core earnings per share are therefore expected in the range of EUR 4.40 - 4.80 based on an average of 188 million shares outstanding.Based on UCB's current assessment of the Covid-19 pandemic, UCB remains confident in the fundamental underlying demand for its products and its prospects for long-term growth. UCB will continue to closely follow evolving COVID-19 pandemic diligently to assess potential near- and mid-term challenges.
CFO transition in 2020 - on July 1(st), UCB welcomed Sandrine Dufour as Executive Vice President and Chief Financial Officer. Sandrine is now a member of UCB's Executive Committee reporting to Jean-Christophe Tellier, UCB's CEO and Chairman of the Executive Committee. Sandrine Dufour is a senior executive with a proven track record and deep financial expertise that stems from more than 25 years leading with successful national and global organizations. From 2015 to recently she held the role of CFO at Proximus, Belgium's largest telecommunication company.
Today, UCB will host a conference call/video webcast at 08.00 (EDT) / 13.00 (BST) 14.00 (CEST).
Details are available on https://www.ucb.com/investors/UCB-financials/Half-year-finan... [https://www.ucb.com/investors/UCB-financials/Half-year-finan...].
About UCB
UCB, Brussels, Belgium (www.ucb.com [http://www.ucb.com/]) is a global biopharmaceutical company focused on the discovery and development of innovative medicines and solutions to transform the lives of people living with severe diseases of the immune system or of the central nervous system. With more than 7 500 people in approximately 40 countries, the company generated revenue of EUR 4.9 billion in 2019. UCB is listed on Euronext Brussels . Follow us on Twitter: @UCB_news
Forward looking statements UCB
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