Grifolswhich this Tuesday is collapsing on the stock market due to a bearish fund report Gotham City Research which has called into question the debt figures reported by the Catalan multinational blood products, has had a problem for some time: an immense debt of more than 9.5 billion euros. One of its objectives was to sell all or part of its business in China, Shanghai RAAS (SRAAS).
After failed negotiations, first with China Resources, with which negotiations stalled; and then with the public company China Merchantswith which an agreement was not reached either, at the end of December an agreement was announced with Haier Group Corporation for the sale of 20% for the equivalent about 1.6 billion euros. Under the terms of the pact, Grifols retained a 6.58% stake in SRAAS, thereby maintaining one foot in the Chinese market. The group, which has “categorically” rejected, through a note to the National Securities Market Commission (CNMV), “any accusation of accounting practices or erroneous information” in its financial statements, estimated that The capital gain from the sale of this stake amounts to 250 million euros.
At the time, Grifols had reaffirmed at its shareholders meeting the strategy followed in recent months of debt reduction and divestments and intended to allocate the resources obtained in this operation to reduce liabilities. In the presentation of the results of the third quarter, the company highlighted that the period between July and September was marked by “significant revenue growth, acceleration of profitability and reaffirmation of deleveraging commitment”.
The debt had practically not gone down, but it had improved the leverage when doing so the results, which stood at 6.7 times the gross operating result (ebitda), compared to 8.6 times a year ago. Presenting the results, the group reiterated its commitment that “deleveraging remains a priority.” The commitment was to reach 4x by the end of 2024 and reach 4.0x by the end of 2024. The total accumulated liabilities are 9,540 million euros. Gothan City claims that, in reality, the leverage would be between 10 and 13 times.
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The truth is that the company passed an ordeal during the pandemic and experienced strong turbulence in the markets that led to the appointment of the Swiss Thomas Glanzmannwho was already president, as CEO, replacing the two cousins Victor and Raimon Grífols, who shared the position. Glanzmann had been appointed CEO in February 2023, following the resignation of Steven F. Mayer for health reasons, and then assumed responsibility for leading the company in the recovery stage after the pandemic. Three months later, he relieved the Grífols and added the position of CEO to the position of executive presidentso he took over all management control.
Thanks to all these changes and the return to profits in the third quarter of last year, Grifols was one of the values with a positive balance on the Ibex and most analysts saw great growth potential. The Gothan City analysis indicates that both Grifols and Scrantonthe family company that owns 8.4% of the company, are misleading investors about their financial statements and, as a result, The group’s shares, far from having great potential for revaluation, would be worth zero euros.