Grifols floods the market with doubts and destroys 4,000 million euros of value, at the lowest levels in 2012

Laura de la Quintana Madrid

Madrid

Updated Friday, March 1, 2024-02:07

Grifols has become the best example to explain how a poor communication strategy can lead to an unprecedented crisis of confidence.

Yesterday the Catalan blood products company presented its annual accounts in which it declared a net profit of 59 million euros, 71% less than the year before, and record income, which exceeded 6,592 million euros.

But all this was obscured by

two very atypical situations among large listed companies: the auditor, KMPG, has not ratified the annual accounts;

and, two, one of the independent directors has not signed them

due to his "absence due to a personal issue," as the company argued yesterday.

The lack of specificity in the answers given during the conference with analysts held this Thursday caused an avalanche of sales that led to stock market panic.

Since the board of directors finished giving explanations at 3:30 p.m. yesterday,

Grifols shares began a collapse that reached 35% at the time of closing, two hours later, to 7.58 euros , lows not seen since 2012

and which are below the first bearish push of the month of January, when the first report from Gotham City was known.

It also coincided with the opening of Wall Street, where Grifols is listed through ADRs and which yesterday fell just over 20% within minutes of closing.

Just before the start of the conference the shares fell about 3%.

The company again left the media out of questions yesterday, without the possibility of intervening.

Since Gotham City published its report on January 8, Grifols has lost almost half of its stock market value, more than 4 billion euros.

Gotham celebrated the collapse with a meme on the social network X of applause.

The excuses given by the management of Grifols, led by its president, Thomas Glanzmann, were not convincing.

On two occasions the analysts questioned him both about the investigation being carried out by the CNMV and the fact that the auditor of his accounts, KPMG, has not yet given the green light to the annual results and the response of the current executive president. It was brief and, based on the reaction on the stock market, insufficient.

"We responded as quickly as possible to all the questions [from the regulator]. They are doing their job. We are here when they are ready," replied Glanzmann,

recalling that KPMG will have its audit report ready before March 8.

Sources familiar with the situation allege that

the company "was aware" that KMPG needed a longer period

to ratify the accounts after "the additional information that the CNMV requested last week" from the company and that it would also require the help of the auditor;

among others, the contracts with Scranton, according to financial sources, which are not public nor are those of its investees, BPC Plasma and Haema.

In any case, this is not a common situation in companies listed on the Ibex 35, financial sources point out.

Nor is the fact that one of the directors does not sign the accounts.

This is

James Costos, an independent director

who joined Grifols in October 2020. He was the US ambassador to Spain between 2013 and 2017. The company justifies that Costos has not signed its semi-annual results because he has been "absent." for personal reasons and clarify that "he has not expressed any disagreement or opposition."

If this justification were proven to be false, the listed Catalan company would be exposed to sanctions from the regulator.

This is what happened with Marcos de Quinto when he resigned from his position as a director at Telepizza in 2018. The CNMV fined the then listed company 150,000 euros for lying about the reasons.

Many questions

And there is more.

The accounts presented yesterday raise doubts about

why BPC Plasma distributed a dividend of 266 million euros to Scranton

, its owner, which is, in turn, an investment

holding company

historically linked to the Grifols family, although the company has defended itself by arguing that only 20% of his advisors have his last name.

It says nothing about the executives linked to the Catalan company for years, such as Tomás Agá, Jordi Fábregas or Juan Javier Roura.

This dividend would have been paid by reducing the value of BPC.

"BPC Plasma distributed a dividend without cash outflow, offsetting other non-current financial assets (...) with an impact against the reserves of the group's non-controlling interests," the company's financial statements clarify.

"Something unprecedented," say the sources consulted.

"It's something I haven't seen in 30 years and I couldn't explain," they acknowledge.

Grifols has full control of the BPC business, although it is a 0% stake that it consolidates in its accounts, what is not known is how.

This can be done because the repurchase option

has been reserved

sine die , together with Haema, for 530 million dollars.

It should be remembered that in 2018 Grifols acquired these two companies and immediately sold them to Scranton, which is the current and sole owner of them.

For Grifols, they are part of related operations and both companies are consolidated in their results, although their participation is 0%.

In the document presented yesterday, the listed company clarifies that it has over BPC and Haema the "power to direct the relevant activities of these companies, given that it manages them and jointly determines their business plan."

What is not clarified is how much of the profit is consolidated (in the previous public appearance he pointed to 30 million euros of EBITDA between both) nor of the debt.

The company has been asked by EL MUNDO in this regard and has not given a response.

Furthermore, in the event of non-payment by either of the two companies, Grifols will be the one to stand up for them before the banks.

Another key issue is

debt

.

Here, the company has been highlighting its commitment to reducing debt for almost two months.

At the end of 2023 it amounted to 9,925 million euros, 35 million less than the end of last year.

It owes the banks 3,309 million, according to the value that appears in its books, 110 million less than in 2022.

The company has announced a debt ratio of 5.4 times because it already includes the sale of its stake in Shanghai Raas to Haier, for around 1.7 billion euros.

Aspires to finish the year in all 4 times.

This is one of the critical points pointed out by Gotham.

Likewise, Grifols, as announced yesterday, will repay the 1.8 billion euros in maturities that it has in 2025 throughout the first half of the year.

JP Morgan analysts reflected yesterday in their report how the panic had moved to bond prices, making investors "nervous", although they have a positive view of the firm in the medium term.