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FIRST QUARTER 2020 REPORT PRESENTATIONThomas Eldered, CEO
Tobias Hägglöv, CFO
3
ROBUST START TO 2020ADAPTED BUSINESS AND DELIVERED PROFITABLE ORGANIC GROWTH
10.3%EBITA margin
267MSEK EBITA
43%Sales increase
1.8
2.6
Q1 19 Q2 Q3 Q4 Q1 20
Net salesSEK bn
171
267
Q1 19 Q2 Q3 Q4 Q1 20
EBITASEK m
Net sales of SEK 2,593 m, +43%
EBITA SEK 267 m, +56%
EBITA margin 10.3% (9.4)
Profit after tax SEK -230.4 m (79 m) reflecting acquisition and integration
Strong liquidity position SEK 1,437 m
4
CONTINUED OPERATIONAL PROGRESSINTEGRATING CONSORT WHILST MANAGING THE CHALLENGES OF COVID-19
Completed strategic acquisition of Consort Medical, consolidating our top 5 global status, integration progressing to plan
Rapidly adapted business operations and supply chains to minimise impact from effects of COVID-19
Internal reorganisation to four strategic segments completed
Delivered strong organic growth in three of the four segments against strong comparables
Double digit organic growth in Steriles from volume gains in lyophilised injectables and blow-fill-seal products
Oral Solids performed well; won additional contracts but suboptimal operating conditions as a result of COVID-19
Advanced Delivery Systems margin growth significantly ahead of sales growth offsetting sales rephasing and supply chain delays
Development and Licensing growth resulted from higher own product sales offset by decline in development services as a result of COVID-19
DEVELOPMENT & LICENSINGSOLIDS & OTHERS
Sales +12% EBITA +27%
STERILESADVANCED
DELIVERY SYSTEMS
Sales +49% EBITA +13%
Sales +120% EBITA +169%
Sales +23% EBITA +3%
5
DEEPENED GEOGRAPHIC FOOTPRINTSALES GROWTH Q1 2020
FRANCE +3%
Fontaine
Kaysersberg
Monts
Pessac
ITALY +26%
Brescia
Lainate
Masate
Paderno Dugnano
Pianezza
PORTUGAL +18%
Odivelas
Queluz
USA +96%
Research Triangle Park
SWEDEN +16%
Stockholm
Höganäs
Karlskoga
Solna
Strängnäs
Uppsala
Uppsala
ISRAEL +57%
Ness Ziona
INDIA +3%
Bengaluru
Karnal & Paonta Sahib
Manufacturing Development
EUROPE
UK +189%
Cambridge
Cramlington
Holmes Chapel
Kings’s Lynn
Milton Keynes
Nelson
Queenborough
GERMANY +179%
Monheim
Wasserburg
Zwickau
SPAIN -7%
Leganés
Parets Device development and manufacturing
6
COVID-19 RESPONSETHE ONGOING PANDEMIC PROVIDES UNCERTAINTY AND SHORT-TERM HEADWINDS
• Employee safety is the top priority; safety protocols enhanced
• No visitor and non-essential access to sites
• Video quality audit procedure launched
• Sub-optimal conditions in almost all factories
• Elevated levels of absenteeism, compensated by overtime
• Reorganized workflows to maximize social distancing
• Unplanned disruptions of work processes curtailing efficient execution
• Poor availability of consultants and technical support
• Temporary suspensions of manufacturing
• Transport disturbances and raw material supply delays
• Consort integration and synergy gain at slower pace but still on track to be achieved latest Q2 2021
• Recovery of the Cramlington site from incident mid 2019 will take longer
• Development projects have been postponed or cancelled
• However, most issues have been successfully mitigated
• Health care support opportunities
7
Annual savings
SEK 125m synergies
CONSORT INTEGRATION AND SYNERGIES
Integration programme prime objectives
Ensure Business Continuity post acquisition
Define and implement the new operating model
Identify and implement cost synergy savings, latest Q2 2021
Explore commercial synergies
Progress
Company delisted
Key stakeholder communication
Former Aesica businesses re-branded and operating according to Recipharm model
HQ and Aesica divisional personnel costs will be realised in Q3
Identifying savings on track – minor effect already in Q1 and total will be backloaded
Next phase focus areas
Procurement
IT
HR activities
8
CONSOLIDATING OUR GLOBAL POSITIONCREATED A LEADER IN INTEGRATED ADVANCED DELIVERY SYSTEMS
Completed acquisition of Consort Medical in February 2020
Progressing first phase of integration, delivering against 60 day plan to ensure continuity of business
Defined new operating model and identified cost and revenue synergy opportunities
Extensive group-wide customer engagement, demonstrating new and more innovative product proposition
Refined management and reporting structure to better align business for growth and drive synergy capture
Well positioned to take advantage of the many growth opportunities seen by the enlarged group
9
WELL POSITIONED FOR CONTINUED GROWTHSTRONG FOUNDATIONS
• As a leading CDMO, expertise and foundations allowed us to navigate a dynamic and
challenging Q1 and deliver organic growth
• Rapidly responded to short term challenges presented by Coronavirus
• adapted operations to ensure the health and safety of our work force
• controlled costs
• invested in our supply chain to meet our customers’ demand
• Notwithstanding short-term situation, CDMO Industry remains robust and is
underpinned by strong fundamentals
• Organisation is scaled and structured to execute against our long-term growth
strategy
• Still seeing many new opportunities to drive growth, profitability and materially
deleverage post acquisition
• Preparation for previously announced equity issues ongoing
10
FINANCIALS
Tobias Hägglöv, CFO
11
P&L DEVELOPMENT
*) Defined as Operating Cash Flow, including working capital changes and maintenance investments
MSEK Q1 2020 Q1 2019 2019 FY
Net sales 2,593 1,812 7,457
Organic 4% 2% 5%
Acquired 37% 14% 9%
Currency 2% 4% 3%
EBITA 267 171 788
EBITA margin 10.3% 9.4% 10.6%
Free Cash flow*) -91 168 374
Core EPS 1.56 1.27 7.09
12
NEW SEGMENTS FROM Q1, 2020
STERILES
DEVELOPMENT & LICENSING SOLIDS & OTHERS
ADVANCED DELIVERY SYSTEMS
13
EBITA BRIDGE Q1 Y-O-Y
MSEK
307 354307
0
50
100
150
200
250
300
EBITA Q1 2019 AdvancedDeliverySystems
Steriles Solids & Others Development &Licensing
Discontinuedoperations
Other EBITA Q1 2020
267
171
+57
- 3+8 +15
+47+62
+133
+2
14
ADVANCED DELIVERY SYSTEMS
EBITA BRIDGE, JAN – MAR
SALES BRIDGE, JAN – MAR
MSEK EBITA
2019 37
Currency 3
Acquisitions 54
Organic 6
Total 62
2020 99
Sales, MSEK Sales, %
2019 229
Currency 7 3
Acquisitions 316 138
Organic -47 -20
Total 276 120
2020 505
0
100
200
300
400
500
600
Q1 2019 Currency Acquisitions Organicgrowth
Q1 2020
0
20
40
60
80
100
120
Q1 2019 Currency Acquisitions Organic Q1 2020
15
MANUFACTURING SERVICES – STERILES
EBITA BRIDGE, JAN – MAR
SALES BRIDGE, JAN – MAR
MSEK EBITA
2019 48
Currency 2
Acquisitions -
Organic 11
Total 13
2020 61
Sales, MSEK Sales, %
2019 588
Currency 16 3
Acquisitions - -
Organic 57 10
Total 73 12
2020 660400
500
600
700
Q1 2019 Currency Organic growth Q1 2020
0
20
40
60
80
Q1 2019 Currency Organic Q1 2020
16
MANUFACTURING SERVICES – SOLIDS & OTHERS
SALES BRIDGE, JAN – MAR
EBITA BRIDGE, JAN - MAR
Sales, MSEK Sales, %
2019 692
Currency 11 2
Acquisitions 321 46
Organic 9 1
Total 341 49
2020 1,034
MSEK EBITA
2019 60
Currency 1
Acquisitions 14
Organic -7
Total 8
2020 68
400
500
600
700
800
900
1 000
1 100
Q1 2019 Currency Acquisitions Organic
growth
Q1 2020
0
10
20
30
40
50
60
70
80
Q1 2019 Currency Acquisitions Organic Q1 2020
17
DEVELOPMENT & LICENSING
SALES BRIDGE, JAN – MAR
EBITA BRIDGE, JAN – MAR
Sales, MSEK Sales, %
2019 264
Currency 6 2
Acquisitions 35 13
Organic 20 8
Total 61 23
2020 325
MSEK EBITA
2019 72
Currency 1
Acquisitions 1
Organic 0
Total 2
2020 74
0
100
200
300
Q1 2019 Currency Acquisitions Organic
growth
Q1 2020
40
50
60
70
80
Q1 2019 Currency Acquisitions Organic Q1 2020
18
FINANCE NET
• Interest-expense increase due to higher volumes
• FX impact of -53 MSEK
• Non-recurring items of -36 MSEK
Finance Net (MSEK) Q1, 2020 Q1, 2019
Interest expenses -99 -33
FX impact -53 36
Non-recurring items -36 0
Other -7 -5
Total -195 -2
19
Q1 CASH FLOW
MSEK Q1 2020 Q1 2019 FY 2019
Operating Cash Flow 105 218 870
Total NWC changes -114 0 -62
Maintenance capex & other -82 -50 -434
Free cash flow -91 168 374
Expansion capex -16 -14 -69
Business combinations -5,957 - -244
Divestments 3 - 21
Cash flow after investing activities -6,062 154 81
Net Debt/EBITDA 8.7* 3.9 3.2
*) Includes only two months of EBITDA from former Consort Group
20
NET DEBT
Net Debt Q4, 2019 4,152
Business Combinations/Acquisition of shares in Consort Medical 5,957
Replacing existing debt in Consort Medical 2,071
Transaction/non-recurring payments and other 279
Net Debt Q1, 2020 12,459
MSEK
• Planned rights issue of 2,500 MSEK
• Recipharm will continue its strong track record of deleveraging and strengthening the balance sheet
21
FINANCIAL PROGRESS DELIVERED ROBUST ORGANIC REVENUE GROWTH
Completed reorganisation of financial reporting to the four strategic segments previously announced
Integrating finance team, aligned reporting and accounting principles across the enlarged group
Committed to responsible capital allocation, focused deleveraging post acquisition, banks remain supportive of deleveraging plan
Implemented value and synergy capture initiatives to support cash generation
COVID-19 means short-term headwinds, medium to long-term outlook remains in line with our previous expectations
CONCLUDING REMARKSThomas ElderedCEO
23
COMMITTED TO NEW FINANCIAL TARGETSCOVID-19 IS PROVIDING A SHORT TERM HEADWIND
SALES
LONG-TERM GROWTH OF
≥11%CAGR
MARGIN EBITA ≥12%
CAPITALEFFICIENCY
RETURN ON OPERATING
CAPITAL
≥10%
Note. All measures are Alternative Performance Measures
24
SUMMARY Q1 2020PLATFORM FOR FURTHER ACCRETIVE GROWTH
10.3%EBITA margin
267MSEK EBITA
43%Sales increase
Completed transformational acquisition of Consort Medical
Integration and synergy capture plans progressing according to plan
Delivered organic EBITA growth ahead of sales growth
Demand from customers remains strong
High levels of liquidity to support business
Confident in medium and long term outlook
On track to significantly deleverage the business
Well positioned to benefit in a growing industry
25
Q&A
26
CONTACT INFORMATION
Thomas Eldered
CEO & Managing Director
+46 (0)8 602 52 10
Tobias Hägglöv
CFO & EVP
+46 (0)8 602 52 00, [email protected]