Q4 2015 PRESENTATI ON 24 FEBRUARY 2016 1
HIGHLIGHTS THOMAS ELDERED, CEO 2
HIGHLIGHTS Q4 • Net sales SEK 863 million, decrease of 1.1% • D&T strong performance (in spite of less Thyrosafe) • EBITDA SEK 110 million, decrease of 25% • Sterile liquids weaker than our expectations • EBITDA-margin 12.7% , decrease of 4.2% - • Solids and others in line with our expectations points • Continued strong operating cash flow 2014 (1) 2015 (1) • Long term supply agreement with Alcon and acquisition in France Sterile Development and Sterile Development and 15 Liquids Technology Liquids Technology • Initiated acquisition of Nitin Lifesciences Ltd, % 26 22 27 India % % % • Partnerships and strategic investments 59 51 • Cost and efficiency program in Sweden % % Solids & Other Solids & Other • Full year profit for the period SEK 215 million, increase of 34% • Proposed dividend SEK 1.50 per share, increase of 20% • Equity issue SEK 276 million in Q1 2016 (1) January-December . 3
MANUFACTURING SERVICES - STERILE LIQUIDS Net sales SEKm 300 • Long-term supply agreement of 250 200 ophthalmic blow-fill-seal products for 150 Alcon 100 50 • Discontinued packaging only contract 0 Q1 Q2 Q3 Q4 in France EBITDA SEKm • Lyophilisation capacity expansion in 70 60 Wasserburg progressed according to 50 plan 40 30 • Destocking with certain customers 20 10 0 Q1 Q2 Q3 Q4 2015 2014 4
MANUFACTURING SERVICES - SOLIDS & OTHERS Net sales SEKm 600 500 • Cost and efficiency program in 400 300 Swedish operations 200 • Continued effect from major product 100 0 volume loss in France Q1 Q2 Q3 Q4 • Continued effect from discontinued EBITDA SEKm 70 distribution 60 50 40 30 20 10 0 Q1 Q2 Q3 Q4 2015 2014 5
DEVELOPMENT & TECHNOLOGY Net sales SEKm • Development collaboration and 250 200 investment consortium in Xspray 150 Microparticles AB 100 • Secured long-term supply of Erdostein 50 0 to Daewong Pharmaceuticals, Korea Q1 Q2 Q3 Q4 • Exclusive scale-up and commercial EBITDA SEKm manufacture agreement with Lidds AB, 80 including equity investment 60 40 • Start-up of Israeli chemistry laboratory 20 • Low Thyrosafe sales 0 Q1 Q2 Q3 Q4 2015 2014 6
GROWTH INITIATIVES ON TRACK 2 0 1 5 YTD Grow th initiatives Track record Strengthened sales organisation Flat organic growth Growth in existing manufacturing footprint and Sequential growth in 2013-14 ~ 3% annual growth capacity acquired businesses (constant FX) Strong demand for freeze drying Wasserburg expansion on Capacity expansion in 100% utilization track manufacturing SEK 198 M in capex Invest EUR 32m (decided 2013) 92% increase vs. 2014 12% share of total sales 2014 High growth in (9% excluding originate from D&T projects. strategic important acquisitions & Thyrosafe) 16% of Group sales D&T 22% of Group sales Development of IP portfolio + 3 since 2007 Kayserberg (Alcon, FR) Portfolio outsourcing with asset acquisitions 2014: Pessac (FR) Projects under review + 6 since 2007 OT Chemistry (SE) Acquisition of 2014: Corvette (IT) Nitin Lifesciences Ltd (IN) 2016 CDMOs Lusomedicamenta (PT) Projects under review 7
LONG-TERM OUTSOURCING CONTRACT WITH ALCON Arrangement Overview Benefits of the arrangement Long-term relation with important customer • Agreement with Alcon, a Novartis company Alcon/ Novartis • Long-term outsourcing of a range of ophthalmology products Blow-fill-seal adds to sterile technology offering • Concurrent acquisition of a manufacturing facility in Kaysersberg, France Potential synergies with Recipharm’s other French companies • Approximately 260 employees continue employment with Recipharm Attractive financial impact, accretive to • Completed December 31, 2015 margins, growth and EPS Key Financials / Term s • Expected annual sales in excess of EUR 36 million • Expected EBITDA-margin well in line with FY2015 group average • Consideration for manufacturing asset was SEK 139 million Sources: Company filings. 8
ACQUISITION OF NITIN LIFESCIENCES Nitin Lifesciences - Business Overview Strategic Rationale of the Acquisition Significant presence in expanding Indian • Rapidly growing Indian CMO specialized in market and platform for further growth in injectables manufacturing emerging markets • Offers liquid ampoules, liquid vials, sterile dry Strengthens position in Steriles with a broad powder (beta lactam& non beta lactam), small volume parenteral portfolio multidose-eye/ ear drops and lyophilized vials • Sales predominantly in India, with growing Acquisition of a high quality customer base in export share to currently 11 countries India and globally • Approximately 500 employees Attractive financial impact as acquisition is • Established in 1994 accretive to margins, growth and EPS Key Financials / Term s Recipharm ’s Em erging Markets Footprint • Acquisition of 74% with option for remaining 26% Recipharm Recipharm + Nitin • Purchase price: INR 6,712m (SEK 824m) Standalone • Valuation: 12.2x EV/ LTM EBITDA • Preliminary 2015 sales INR 2,946m (SEK 365m) • Preliminary 2015 EBITDA INR 747m (SEK 93m) • Preliminary EBITDA-margin 25% • Completion planned to April 1, 2016 9 Sources: Company filings.
ACQUISITION OF MITIM SRL (ITALY) To be presented later
FINANCIALS BJÖRN WESTBERG, CFO (CURRENCY SEK MILLION) 1 1
P&L DEVELOPMENT YTD Q4 2015 2014 2015 2014 Net Sales 862,9 872,9 Net Sales 3389,4 2569,3 EBITDA 509,8 399,3 EBITDA 111,1 147,3 15,0% 15,5% 12,9% 16,9% D&A -235,6 -127,2 D&A -59,1 -52,0 EBIT 274,2 272,1 EBIT 52,0 95,3 Financial items 35,4 -56,0 Financial items -5,1 -40,6 Profit before tax 309,6 216,1 Profit before tax 46,9 54,7 Tax -94,6 -55,9 Tax -17,5 -5,7 Net profit 29,4 49,0 Net profit 215,1 160,2 1 2
MANUFACTURING SERVICES – STERILE LIQUIDS Sales Full year Sales Q4 2014 713 2014 240 Aquisitions + 260 Acquisitions + 7 FX effect + 17 Others Others -33 (Disc. packaging FR & destocking) -31 2015 (+ 34% ) 957 2015 216 EBITDA Q4 EBITDA Full year 2014 158 2014 64 Acquisitions + 65 Acquisitions + 4 FX effect + 5 Retroactive price increase Q1-14 -6 Others (lower sales & product mix) -19 Others -1 2015 49 2015 221 EBITDA margin 23.1% (22.1) 13
MANUFACTURING SERVICES – SOLIDS AND OTHERS Sales Q4 Sales Full year 2014 491 2014 1 578 Acquisition effect (8% ) + 40 Aquisitions + 289 FX effect + 6 FX effect + 31 Distribution services -4 Distribution services -19 Large product - competition in FR -10 Large product – competition in FR -51 Others (almost no Thyrosafe) -9 Others + 4 2015 514 2015 1 832 EBITDA Q4 EBITDA Full year 2014 198 2014 61 Acquisitions + 27 Acquisition effect -9 Inventory effect Q1 2014 -11 Cost and efficiency program -15 One-off internal services 2014 -22 Others (Lower sales & product mix) + 2 Others (Lower sales, product mix) -75 2015 39 2015 117 EBITDA margin 6.4 (12.6) 14 14
DEVELOPMENT & TECHNOLOGY Sales Full year Sales Q4 2014 399 2014 182 Aquisitions + 385 Acquisitions + 25 FX effect + 3 Tender product -28 Tender product -52 Royalty (reclassified) -4 Royalty (reclassified) -4 Others + 8 Others + 36 2015 183 2015 767 EBITDA Q4 EBITDA Full year 2014 101 2014 36 Acquisitions + 102 Acquisitions + 6 Others + 19 Others + 3 2015 222 2015 45 EBITDA margin 28.9 (25.2) 15 15
-1% CHANGE IN Q4 NET SALES 900 785 785 8 7 3 4.6% 8 6 3 0.6% 785 850 -0.5% -3.2% -1.1% -1.5% 800 750 2/ 1/ 3/ 1/ Currency translation effect 2/ Reclassification Royalty (Q4 2014 part of Other operating revenue) 3/ Soldis and Others product facing increased competition in France 16
2015 PERFORMANCE KPI s 2015 2014 Net Sales (12M) 3 389 2 569 EBITDA (12M) 510 399 EBITDA margin (12M %) 15.0 15.5 Earnings per share (SEK) 4.72 4.63 Ret urn on equit y (%) 8.8 11.4 ROOC (%) 7.6 12.4 Equit y t o asset s (%) 48.1 39.4 Net working capit al t o Sales (%) 18.1 27.3 Net debt (SEKm) 1 183 1 164 Equit y 2 740 2 131 Capit al Employed 3 923 3 295 Net debt t o Equit y 0.4 0.5 Net debt t o EBITDA 2.3 2.9 1) Net working capital is calculated as I nventory + AR + Prepaid exp&Accr I nc - AP-Accr exp&Prepaid I nc 17
REVISED LONG TERM OBJECTIVES • Annual sales should exceed SEK 8 billion by 2020 • EBITDA margin should be higher than 16% • Net debt to equity should be less than 0.8 • Dividend pay out should be 30-50% of profit after tax (unchanged) Proposed dividend for 2015 SEK 1.50 per share (1.25), an increase of 20% 18
CONTACT INFORMATION Thomas Eldered Björn Westberg CEO & Managing Director CFO & EVP Finance, Control & Investor Relations 08-602 52 10 08-602 46 20, ir@recipharm.com 1 9
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