Salute e Benessere
H1 2024 Results - Focus-27 strategic plan on track with timely execution of the operational roadmap
" Our H1 actions set the foundations of our more agile, streamlined, and value-creating model. Over the past months, with the entire organization's support, we have made significant progress in deploying the four strategic pillars of our operational roadmap. Thanks to a comprehensive mitigation plan, we will resume shipment and production in Brindisi in the coming weeks." said Ludwig de Mot, Chief Executive Officer of EUROAPI . "Confident in the collective success of our plan, we are in advanced discussions with our stakeholders to finalize the financing of FOCUS-27 in the coming weeks, which will pave the way for long-term profitable growth.”
€448.7 million in Net Sales, down by 9.6% , shaped by the strong decrease in volumes from Sanofi and the suspension of production in Brindisi, which overshadowed the positive momentum of sales to clients other than Sanofi
€47.6 million Core EBITDA, with a 10.6% Core EBITDA margin , down from 12.6% in H1 2023. Price increases and product mix, industrial efficiencies, and the impact of the revised commercial contractual clauses with Sanofi over the period partially offset the unfavorable fixed-cost absorption. €(1.4) million EBITDA, including €47.2 million exceptional costs related to the implementation of FOCUS-27.
€(170.2) million Net Debt compared to €(171.0) million at the end of December 2023, with €10.0 million Free Cash Flow before financing , compared to €(111.2) million for the same period last year, driven notably by
€(34.8) million Net income, compared to €62.8 million in H1 2023
H1-2024 Key figures
2024 outlook confirmed
FOCUS-27 plan in action
The execution of FOCUS-27 is on track, with several initiatives launched during the first half, and the discussions with the Revolving Credit Facility banking syndicate to finalize the financing announced on June 26, 2024, are in the advanced stage.
H1-2024 Net Sales
EUROAPI H1-2024 Net Sales reached €448.7 million, -9.6% versus H1 2023 and -9.3% at Constant Exchange Rates.
Net sales per type of activity
API Solutions
API Solutions' net sales decreased by 8.3% to €332.4 million.
CDMO
CDMO sales decreased by 13.3% to €116.4 million.
Throughout the semester, 14 new CDMO contracts were signed , and eight projects were completed, including two in late stage with Sanofi, and two projects were put on hold.
Net Sales per type of molecule
Financial performance
Gross profit was €98.0 million, compared to €97.0 million in H1 2023, with the gross profit margin up 231 basis points year-on-year to 21.8%. The exceptional impact of Buserelin's stock clearance, positive price and mix effect, lower energy and raw materials prices, and improved industrial performance more than offset unfavorable fixed-cost absorption as we sold in H1 24 products manufactured at the peak level of the past 18 months inflation cycle.
Core EBITDA amounted to €47.6 million, down 23.8% compared to €62.5 million in H1 2023. The core EBITDA margin was 10.6%, compared to 12.6% in H1 2023. The increase in OPEX was mostly driven by the company's transformation and reorganization.
EBITDA was €(1.4) million compared to €52.1 million in H1 2023 . The 49.0 million non-recurring costs include €47.2 million in exceptional items , of which
Operating Income was €(33.4) million compared to €16.0 million in H1 2023.
Financial income was €(8.1) million, compared with €(3.3) million in H1 2023, due notably to the increase in interest rates and the full drawdown of the RCF. Income before tax was €(41.5) million . Net income was €(34.8) million in H1 2024.
Net Debt Position and Cash Flow
The decrease in Net Debt position, €(170.2) million compared to a €(171.0) million at the end of December 2023, was notably driven by Working Capital, including the improvement in inventories. Improved cash collection drove the change in Trade receivables, with DSO down to 53 compared to 56 in December 2023 and 70 in H1 2023. Other current assets and liabilities include a €27 million variation in VAT tax reimbursement.
Capex reached €(61.3) million (13.7% of Net Sales), of which 56% were dedicated to growth projects, including increased capacities for Peptides and Oligonucleotides, Vitamin B12, and Prostaglandins.
Free Cash Flow before financing activities was €10.0 million, compared to €(111.2) million at the end of June 2023 .
Net Debt to Core EBITDA restated for IFRS 16 was 2.38x, below the RCF covenant of 4.0x.
ESG Roadmap
EUROAPI ESG roadmap is on track to achieve its 2030 goals and has recently achieved:
Main H1 2024 events
Glossary and definition of non-GAAP indicators
EBITDA and Core EBITDA
EBITDA corresponds to operating income (loss) restated for depreciation and amortization and net impairment of intangible assets and property, plant and equipment.
Core EBITDA thus corresponds to EBITDA restated for restructuring costs and similar items (excluding depreciation and write-downs), allocations net of reversals of unutilized provisions for environmental risks, and other items not representative of the Group's current operating performance or related to the effects of acquisitions or disposals.
Cash Flow before Financing activities
Cash Flow before Financing activities corresponds to the sum of Cash Flow from Operating Activities and Cash Flow from Investing Activities as presented in the consolidated statement of Cash Flow.
Months on Hand (MOH)
Net Inventory value at the of the period divided by Net Sales
New clients
Clients representing at least €50 thousands of net sales on the year.
Cross Selling
Selling a different product to an existing client that is already buying one or several products from EUROAPI.
Early-stage and Late-stage projects
Early-stage: pre-clinical, phase 1, and phase 2
Late-stage: phase3, in validation, and commercial
Presentation of H1-2024 results
An analysts' conference call will be held by EUROAPI's management tomorrow (31 July 2024) at 8:30 a.m. CET via an audio webcast (live and replay), and the results presentation will be available on the corporate website 2024 Half year results | EUROAPI
Financial agenda (all dates to be confirmed)
About EUROAPI
EUROAPI is focused on reinventing active ingredient solutions to sustainably meet customers' and patients' needs around the world. We are a leading player in active pharmaceutical ingredients with approximately 200 products in our portfolio, offering a large span of technologies while developing innovative molecules through our Contract Development and Manufacturing Organization (CDMO) activities.
Taking action for health by enabling access to essential therapies inspires our 3,650 people every day. With strong research and development capabilities and six manufacturing sites, all located in Europe, EUROAPI ensures API manufacturing of the highest quality to supply customers in more than 80 countries. EUROAPI is listed on Euronext Paris; ISIN: FR0014008VX5; ticker: EAPI). Find out more at www.euroapi.com and follow us on LinkedIn.
Forward-Looking Statements
Certain information contained in this press release is forward looking and not historical data. These forward-looking statements are based on opinions, projections and current assumptions including, but not limited to, assumptions concerning the Group's current and future strategy, financial and non-financial future results and the environment in which the Group operates, as well as events, operations, future services or product development and potential. Forward-looking statements are generally identified by the words “expects”, “anticipates”, “believes”, “intends”, “estimates”, “plans” and similar expressions. Forward looking statements and information do not constitute guarantees of future performances, and are subject to known or unknown risks, uncertainties and other factors, a large number of which are difficult to predict and generally outside the control of the Group, which could cause actual results, performances or achievements, or the results of the sector or other events, to differ materially from those described or suggested by these forward-looking statements. These risks and uncertainties include those that are indicated and detailed in Chapter 3 “Risk factors” of the Universal Registration Document filed with the French Financial Markets Authority (Autorité des marchés financiers, AMF) on April 5, 2024. These forward-looking statements are given only as of the date of this press release and the Group expressly declines any obligation or commitment to publish updates or corrections of the forward-looking statements included in this press release in order to reflect any change affecting the forecasts or events, conditions or circumstances on which these forward-looking statements are based.
Appendix
Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Statements of Cash Flow
Reconciliation of Consolidated Operating Income (EBIT) to restated Core EBITDA
Restructuring costs correspond to expenses incurred in connection with the transformation or reorganization of the EUROAPI Group's operations and support functions. These costs include collective redundancy plans, compensation awarded to third parties for the early termination of contracts, commitments made in connection with transformation and reorganization decisions, and idle costs related to the temporary shutdown of sites or production lines associated with such programs.
They also include accelerated depreciation charges arising from closures of production facilities (including leased facilities), and losses on any resulting asset disposals.
In addition, restructuring costs and similar items comprise expenses (both internal and external)
incurred in connection with FOCUS-27.
1 All comments in this press release are made compared to H1 2023 figures unless stated otherwise
2 Full-year expected impact: €38 million (Regulated Agreement approved by the May 22 AGM)
3 Buserelin is a large molecule used primarily in the treatment of prostate cancer and endometriosis.
4 See appendix page 13
5 Under-activity triggered by the implementation of FOCUS-27
6 H1 2023 income tax included €46.8m deferred tax income related to the revaluation of EUROAPI's Hungarian assets.
7 See detailed in Consolidated Cash Flow Statement page 12
8 RCF: €451 million + €2 million accrued interests
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