Recipharm AB publishes its interim report January-March 2020
January – March 2020
- Consort Medical Plc consolidated from February 2020
- Continued solid organic growth
- Net sales amounted to SEK 2,593 million (1,812), an increase of 43%
- EBITDA increased by 48% and amounted to SEK 431 million (291) corresponding to an EBITDA margin of 16.6% (16.1)
- EBITA increased by 56% and amounted to SEK 267 million (171) corresponding to an EBITA margin of 10.3% (9.4)
- Operating profit (EBIT) amounted to SEK -29 million (111), adjusted Operating profit amounted to SEK 164 (111).
- Profit after tax amounted to SEK -230 million (79) corresponding to a net margin of -8.9% (4.4)
- Non-recurring items affected operating profit with SEK -194 million (0) and profit after tax with SEK -211 million (0)
- Earnings per share amounted to SEK -3.40 (1.17) before dilution and SEK -3.40 (1.17) after dilution
- Sales and earnings impacted by the COVID-19 situation
- Board of Directors withdraw dividend proposal
Thomas Eldered, CEO:
Robust performance in unprecedented circumstances
“We continue to make good progress towards the long-term strategic objectives which have propelled Recipharm into a top 5 global CDMO. Our strong operational and financial foundations and deep expertise helped us deliver organic growth of 4 per cent in sales and no less than 21 per cent in EBITA, increase margin, progress our integration activities and adapt our business to respond to the dynamic situation COVID-19 presents.
A major event in the quarter was the completion of the acquisition of Consort Medical. My team and I visited the sites, met the teams, took time to more fully understand their operations and communicate with customers. I have been impressed by what I have seen - a committed team who takes pride in past achievements but also a team very much looking forward to becoming part of a larger, growing and more international group. Our main objectives for the short-term integration have been to ensure business continuity, define the new collective operating model and define a clear and executable road map to deliver cost and revenue synergies. This is now well underway. Of course, gradually in the quarter my focus became centred on responding to the escalating COVID-19 situation.
Our team is working hard to ensure our employees stay protected and supported. We have invested in and provided the resources our people need to adapt their working practices, but inevitably we experienced disruptions in our operations resulting from local restrictions. Our operations teams did a great job to ensure that we could continue to supply and service our customers without any major issues throughout the quarter. Customer demand remained largely unaffected. That said, short cycle development services noted a sharp drop in demand, mainly due to customers facing issues with performing clinical trials. Considering the unprecedented circumstances, I am very pleased to report a continued organic growth of 4 per cent resulting in our highest ever quarter one sales, excluding the benefit of the Consort acquisition. Each of the four new reporting segments faced high comparables in the year-earlier period. All except one of the segments noted organic sales increase. Of all the geographies we operate in, I am particularly pleased with the organic growth in Italy and India where conditions have been even more challenging than elsewhere.
In this challenging environment, I am satisfied with the speed with which we have been able to identify and implement various initiatives to mitigate potential cost increases, material supply delays, transport irregularities and high staff absenteeism. Our operating conditions will continue to be monitored and we will not hesitate to take further actions if necessary. We took decisive action to protect our supply chain in this time of operating uncertainty, we increased our stock levels and therefore working capital has increased, but overall declined as a percentage of sales. Maintenance capex remained stable at around 3 per cent of sales. Consequently, as a result of these actions, and with the Consort addition cash flow declined modestly.
In connection with the acquisition of Consort, Recipharm raised an acquisition credit and refinanced existing loans which, as planned, impacted leverage. In addition the COVID-19 situation has temporarily impacted it further. After the previously announced equity issues of approximately SEK 2.5 billion, leverage will again be at an acceptable level and then gradually reach a normal level for our industry in the medium term. We have a responsible approach to leverage and will retain the flexibility to meet our objectives and explore the highly value creating opportunities that the combination with Consort has brought.
In summary, our operations are performing as planned or better, but in the short to medium term, like most across the industry and wider, we face significant uncertainty and I cannot exclude further impact on our sales and profit. That said, our long-term prospects remain unchanged. Demand is stable or even increasing and we have seen operating conditions stabilize compared to March/April. I am confident that our great teams will be able to continue to mitigate the challenges the COVID-19 situation may bring. Our strong reputation for customer satisfaction, uninterrupted during these difficult times, will bring recognition and further benefits as we leverage our top five position in the global CDMO industry.”
The complete report is attached through the link at the end of the press release.
The company invites investors, analysts and media to a web conference (in English) on 7th May at 10:00 am CET, where CEO Thomas Eldered and CFO Tobias Hägglöv will present and comment on the report as well as answer questions.
Click here to participate in the web conference.
Questions may be submitted by dialling below telephone numbers. If you don’t wish to ask questions you only need to participate through the link above.
From Sweden: +46 8 566 426 51
From the UK: +44 333 300 08 04
From the USA: +1 631 913 14 22
Pin code for participants:
Thomas Eldered, CEO, telephone: +46 8 602 52 10
Tobias Hägglöv, CFO, firstname.lastname@example.org, +46 8 602 52 00
This information is information that Recipharm AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, on 7 May 2020, at 07:45 CET.
Recipharm is a leading Contract Development and Manufacturing Organisation (CDMO) in the pharmaceutical industry employing almost 9,000 employees. Recipharm offers manufacturing services of pharmaceuticals in various dosage forms, production of clinical trial material and APIs, and pharmaceutical product development. Recipharm manufactures several hundred different products to customers ranging from big pharma to smaller research and development companies. Recipharm’s turnover is approximately SEK 7.5 billion. The company operates development and manufacturing facilities in France, Germany, India, Israel, Italy, Portugal, Spain, Sweden, the UK and the US and is headquartered in Stockholm, Sweden. The Recipharm B-share (RECI B) is listed on Nasdaq Stockholm.For more information on Recipharm and our services, please visit www.recipharm.com