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THIRD QUARTER INTERIM REPORT PRESENTATION 9 NOVEMBER 2017
THOMAS ELDERED CEO
3
THIRD QUARTER 2017
• Continued focused strategy implementation
• Sales adjusted for Fx and acquisitions -0.8% YoY
• EBITDA margin 8.6% (12.6) • Third quarter holiday and maintenance shutdowns • Delays in Wasserburg, Bengaluru and the US • Impact from ongoing expansion projects • Swedish operations underperforming
• Operating cash flow at 149 MSEK • Balancing capex
• Events after closing • Intention to end operations in Stockholm and Höganäs
6%
16%
6%
16%
5%
-3% -1%
Q1 2016 Q2 Q3 Q4 Q1 2017 Q2 Q3
Sales, YoY growth Adjusted for Fx and acquisitions
-60
139 180
83
-25
154 149
Q12016
Q2 Q3 Q4 Q12017
Q2 Q3
Operating cash flow (MSEK)
4
STRATEGY EXECUTION PROGRESS
Several potential portfolio outsourcing projects – agreement with Roche
Increased number of development projects, building an encouraging pipeline of products new to the market. Launched Recipharm Pathway to Clinic®
Focused efforts in own products and technologies, support to erdosteine
Implementation of contracts and new contract wins in Bengaluru
Strong development in underlying manufacturing business with a large number of tech transfers ongoing, including customers for expanded capacity in Sterile Liquids segment
Continued review of less profitable customer contracts
Streamlining of operations and exploring opportunities with our global structure – intention to end operations in Stockholm and Höganäs communicated after the period end
5
ONGOING SIGNIFICANT CAPEX PROJECTS UPDATE
Lyophilisation and packaging capacity expansion in Wasserburg, Germany • Staff training and test runs ongoing • Capex will be finished in Q4-17, material start-up opex • Ramp-up of commercial supply expected to begin end of Q1-18
Blow-fill-seal capacity expansion in Kaysersberg, France • Test runs to start during Q4-17 • Capex will finish Q1-18, revamping in Q3-17 impacting sales and profit • Ramp-up of commercial supply expected during Q2-18
Lyophilisation capacity expansion in Masate, Italy • Capex on-going, expected finish Q3-18 • Commercial supply expected during Q4-18
Serialisation technology, globally • Implementation on-going, according to plan • Main impact expected from Q2-19
1
4
3
2
6
EVENT AFTER THE PERIOD
INTENTION TO END OPERATIONS IN STOCKHOLM AND HÖGANÄS
• Will address underperformance in Swedish operations • Current EBITDA run rate –25 SEK million p.a. • Expanded network in Solids and Others offers opportunities to optimize and streamline • Will affect approximately 225 employees, negotiations with unions will start today • Contracts will be terminated, customers offered continued supply from other parts of
Recipharm’s manufacturing network • Non-recurring costs expected to be charged Q4-17 • Operations expected to end 2018 (Höganäs) and 2019 (Stockholm)
• An important step in overall streamlining operations strategy • Will improve competitiveness, efficiency and improve market position
HENRIK STENQVIST CFO
(currency SEK million)
8
Q3 P&L DEVELOPMENT
Q3 2017 Q3 2016
Net Sales 1 200 1 138EBITDA 103 144EBITDA margin 8,6 12,6D&A -120 -100EBIT -17 44Financial Items -46 -22Profit before Tax -63 22Tax 9 -10Net Profit -54 12
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MANUFACTURING SERVICES – STERILE LIQUIDS
EBITDA BRIDGE, JULY – SEPTEMBER
SALES BRIDGE, JULY – SEPTEMBER
Sales, MSEK Sales, %
2016 499.0
Currency 0.6 0.1
Acquisitions 0.0 0.0
Organic growth -12.1 -2.4
Total -11.4 -2.3
2017 487.6
SEK million EBITDA
2016 86.5
Currency -0.7
Acquisitions 0.0
Other -27.7
Total -28.4
2017 58.1
400
420
440
460
480
500
520
Q3 2016 Currency Organic growth Q3 2017
0102030405060708090
100
Q3 2016 Currency Other Q3 2017
10
MANUFACTURING SERVICES – SOLIDS & OTHERS
SALES BRIDGE, JULY – SEPTEMBER
EBITDA BRIDGE, JULY – SEPTEMBER
Sales, MSEK Sales, % 2016 507.7 Currency -0.9 -0.2
Acquisitions 61.4 12.1 Organic -26.6 -5.2 Total 33.9 6.7 2017 541.6
SEK million EBITDA
2016 25.7
Currency -0.1
Acquisitions 2.9
Other -16.7
Total -13.9
2017 11.8
400
420
440
460
480
500
520
540
560
580
Q3 2016 Currency Acquisitions Organic growth Q3 2017
0
10
20
30
40
50
60
Q3 2016 Currency Acquisitions Other Q3 2017
11
DEVELOPMENT & TECHNOLOGY
SALES BRIDGE, JULY – SEPTEMBER
EBITDA BRIDGE, JULY – SEPTEMBER
Sales, MSEK Sales, % 2016 161.3 Currency -0.6 -0.4
Acquisitions 11.2 7.0
Organic 35.7 22.1 Total 46.2 28.7 2017 207.5
SEK million EBITDA 2016 36.4
Currency 0.4
Acquisitions 1.0
Other 10.4
Total 11.8
2017 48.2
0
50
100
150
200
250
300
Q3 2016 Currency Acquisitions Organic growth Q3 2017
0
10
20
30
40
50
60
Q3 2016 Currency Acquisitions Organic growth Q3 2017
12
EBITDA BRIDGE VS Q3 2016
0,0
20,0
40,0
60,0
80,0
100,0
120,0
140,0
160,0
180,0
Q3 2017
Other Q3 2016
Capacity Expansion sites
Swedish Operations
Development & Technology
13
CASH FLOW BY QUARTER
mSEK Q1 Q2 Q3 YTDOperating Cash Flow 81 192 3 276
Changes in Working capital -106 -38 146 2Operating cash flow after w.c. -25 154 149 278
Maintenance capex -65 -70 -68 -202Free cash flow -89 84 81 76
Expansion capex -971 -128 -86 -1185
Cash flow after investing activities -1060 -44 -4 -1109
THOMAS ELDERED CEO
15
EXECUTING ON OUR FOCUSED STRATEGY
• Q3: ”Not where we should be, and not where we will be”
• Contributions to growth and profitability • Commercial supply from all three major expansion projects • Manufacturing network optimization and streamlining • Important contract wins, with Roche as the largest • Gradual catch-up in Bengaluru, India • Optimised development offering
• On track to reach our financial targets • Sales target of at least SEK 8 bn by 2020 • At least 16% EBITDA margin
Q&A
17
CONTACT INFORMATION
Thomas Eldered
CEO & Managing Director
+46 (0)8 602 52 00
Henrik Stenqvist
CFO & EVP
+46 (0)8 602 52 00, [email protected]