Grifols pays its first dividend in four years after stabilizing debt

The pharmaceutical company is resuming its traditional shareholder remuneration policy after years of cuts, refinancing, and divestments to reduce its debt.

Grifols paid its shareholders a dividend of 0.1215 euros per share this Wednesday, for both Class A and Class B shares, for a total of 102 million euros.

The remuneration represents a return to normalcy and the restoration of the company's traditional remuneration policy, with a 40% payout (the percentage of profit allocated to dividends), after four years in which the focus has been on addressing the effects of the pandemic and reducing debt.

The blood products giant hasn't paid dividends since June 2021, after suffering a perfect storm: the lockdown plunged the number of plasma donors, which had a significant impact on the group's business.

The nature of the blood products sector made the pandemic particularly noticeable in Grifols' 2021 financial statements , when annual revenue fell by 3.7% and EBITDA fell by 27% to €961 million. That year, the company recorded a €500 million impact on gross profit due to the effects of Covid-19.

In parallel, Grifols, which had been making strong acquisitions for years, launched a bid for the German company Biotest . The Spanish pharmaceutical company closed the acquisition of its German counterpart in 2022 for 2 billion euros, a strategic transaction due to its product portfolio, but one that boosted the company's short-term debt.

With a still-weak EBITDA and debt of nearly €9 billion, the leverage ratio of the company controlled by the Grifols family reached nine times EBITDA in mid-2022. The combination of factors forced the company to use all its resources and prevented the payment of dividends.

In fact, the debt crisis triggered a series of changes within the group, beginning with the resignation in 2022 of Víctor Grifols Roura , the pharmaceutical company's longtime president. Since then, and amid the Gotham City Research attacks, the Grifols family has gradually left executive positions in the company, currently led by CEO Nacho Abia and chaired by Anne Berner.

Grifols announced a plan for cuts and operational improvements in early 2023, which involved the layoff of 2,200 employees in the United States and 100 more in Spain. This was intended to reduce the cost of plasma collection per liter and improve its results, while also beginning to explore divestments. Last year was key to the multinational's debt consolidation, given that it completed the sale of 20% of Shanghai Raas for €1.6 billion and refinanced nearly €2.7 billion in debt, clearing its maturities through 2027.

Operational improvements and the return to normality after the pandemic allowed the group to boost EBITDA in 2024 to 1,779 million euros, which, together with the debt reduction, placed leverage at 4.2 times EBITDA at the end of the first half of this year , the same as that reported at the end of 2019.

Debt stabilization has made the return of the dividend possible, although Grifols' strategic plan for the next four years remains focused on caution and improving cash flow . The company will not undertake major investments during the period, beyond the delisting of Biotest , executed in June for 108 million, and the repurchase of BPC and Haema from Scranton.