Fagron Sa Ord

Good day and welcome to the conference call regarding the Fagron Trading Update Q3 Results 2020. Today's conference is being recorded. At this time, I would like to turn the conference over to Fagron. Please go ahead.

Thank you, operator. Good morning to you all and thank you for joining the third quarter of 2020 Trading Update Conference Call Fagron. We will start with a short introduction by our CEO, Rafael Padilla. and then immediately open the line for questions and answers. Next to Rafael, also our CFO, Karen de Jong, is present to take your questions. Rafael will conclude the call with some closing remarks. Rafael, please go ahead.

Thank you, Constantine, and again, congratulations with the good organization of the day today, Constantine. Thank you all for joining our conference call. Despite the fact that this quarter was again much defined by the impact of the COVID-19 pandemic, we're pleased that we delivered again another strong quarter. Thanks to our product and regional diversification and our reliable supply chain, we're able to navigate well. Both in terms of turnover development and profitability, Fagron once again showed a good performance in the third quarter as demonstrated by 10.7% turnover growth at constant exchange rates. The demand for COVID-19-related products is keeping pace with the development in infection rate, which is rising again in a number of countries. Demand for elective care recovered in a number of regions, although it is being scaled back again in areas where the number of COVID-19 infections is on the rise. Our diversified portfolio allows us to respond effectively to both of these developments, as is evident by the strong performance in Latin and North America. The weakening of the Brazilian real and the Mexican peso had a severe negative impact, but at constant exchange rates, Latin America delivered, once again, strong turnover growth of nearly 24%. Also, North America reported good turnover growth of 6.6%, driven by the strong performance of essentials and especially the brand segments. Compounding services improved compared to the first half of 2020, showing a slight decline in turnover. Our rigid activities, although obviously also impacted by COVID-19 in the third quarter, are still on track to achieve stated long-term targets in 2022. The picture at EMEA was mixed with essentials and particularly brands performing strongly, while compounding services posted a drop in turnover. In the Netherlands, where we traditionally have strong position in compounding services, the impact of scaling back elective care is more difficult to offset by the increase in the amount of COVID-19-related problems. As from September 1, 2020, the European activities are being structured more efficiently to enable us to respond even quicker in the market. Part of this restructuring is going to lead the EMEA region, consisting of Europe, South Africa, and Israel. The flatter organizational structure will lead to better collaboration and more integration to further leverage our market leader position, allowing us to realize synergies, reduce costs, and economies of scale. For instance, in the field of procurement and supply chain. Agility and entrepreneurship should also result in quicker go-to-market strategies. We'll put even more focus on innovation and the development of brands and new products and concepts. Furthermore, we will sharpen focus in the various brands, which in particular applies to our multi-brand model in elements. Another important development remains consolidation, and we are proud to have further strengthened our group in the third quarter of 2020 with the acquisition of Pharma Tamar, a full service player in the Israeli compounding market with a turnover of around 8.1 million in 2019. We will continue to pursue possible acquisition opportunities that may arise in the current market dynamics. The coming quarter will also be dominated by COVID-19 and visibility is limited. Despite the rather limited and non-material impact of COVID-19 on our performance, the economic uncertainty persists. We will therefore continue to manage our investments, cost base and cash flow in a disciplined way while remaining keen on pursuing opportunities. We are proud of the commitment of the whole faculty, our entrepreneurial culture, and our proven resilience during these unprecedented times. Operator, now we'll open the floor for tuning.