IBI-Rating has affirmed the credit rating of bonds of «Pharmaceutical Company «Zdorovye» LLC at uaA grade

IBI-Rating informs on affirming of the long-term credit rating of A-E series interest-bearing bonds of «Pharmaceutical Company «Zdorovye» LLC at uaA grade, with outlook revision from «negative» to «evolving». The credit rating has been kept on the Credit Watch List due to the martial law imposed in connection with the invasion of Ukraine by Russian troops, which has a significant negative impact on the country's economic situation and financial stability.

«Pharmaceutical Company «Zdorovye» LLC is one of the largest domestic manufacturers of pharmaceutical products and produces more than 400 drugs in the following forms: tablets, ampoules, carpules, capsules, gels, ointments, creams, aerosols, sprays, syrups, solutions, powders, etc. The Company exports its products to more than 20 countries. The production and sale of medicines depends on government regulation, primarily licensing.

The decision about the public bond offering (series A-E for the total amount of UAH 300 million) was made by the General Meeting of the Issuer's participants on 22.06.2015. The purposes of raising funds from the bonds placement are: acquisition of rights to use intellectual property objects related to the organization of pharmaceutical production; purchase of raw materials for pharmaceutical production; financing of expenses for the construction and arrangement of a new workshop and modernization of existing production facilities and equipment.

The net income of «Pharmaceutical Company «Zdorovye» LLC in 2022 amounted to UAH 1.4 billion, which is 47% less compared to the same period in 2021. In turn, the issuer's net profit for 2022 amounted to UAH 77 million, as opposed to a loss of UAH 39.6 million for the period of 2021. Given the significant decrease in the institution's current liabilities against the background of a significant accumulation of current account balances, there was a partial decrease in the net debt of «Pharmaceutical Company «Zdorovye» LLC. It should also be noted that most of the liabilities are long-term, which partially reduces liquidity risks. Additionally, the Issuer's sensitivity to currency risk is mitigated by the availability of export revenues.

The affirmation of the credit rating with outlook revision from «negative» to «evolving» is due to the reduction of the debt burden (with most of the borrowings being long-term), the Issuer's entry into the number of the largest pharmaceutical manufacturers in Ukraine, the availability of financial support from the shareholder, diversification of sales markets, as well as high liquidity and performance indicators. In turn, the Rating agency takes into account the high dependence of the production and sale of medicines on state regulation, as well as sensitivity to operational and other risks due to the ongoing military operations in Ukraine as a result of the aggression of the Russian Federation.

In order to conduct the analytical research the materials provided by «Pharmaceutical Company «Zdorovye» LLC have been used, including: annual financial statements for 2020-2022 and 3 months of 2023, background information on the activities of LLC «Pharmaceutical Company «Zdorovye», information on the issue of bonds, other necessary internal information, as well as the information from the public sources, which the Rating agency considers credible.

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