(BFM Bourse) – The half-yearly publication of the world leader in active pharmaceutical ingredients is hailed on the stock market. Euroapi reassures on the orientation of its activity and its prospects for 2023 after having disappointed on its performance in 2022 which had been weighed down by the closure of a production line.
Euroapi is back in favor with investors after having suffered a difficult year in 2022. The world leader in active pharmaceutical ingredients announced reassuring half-year results on Tuesday morning.
Over the first six months of the year, Euroapi published an overall turnover up 2.6% to 496.6 million euros. The group’s sales were notably driven by its CDMO (“Contract development and manufacturing organization”) activity, i.e. the production of active ingredients for which the group does not own the intellectual property. The turnover of this division increased by 9.8% to reach 134.2 million euros.
And within this division, two dynamics have opposed each other over the past six months. On the one hand, the turnover achieved with other customers recorded strong growth of 18.5% when the income derived from its activities with its former parent company Sanofi contracted by 1.8% on the period.
Profitability above expectations
A little further down in the accounts, Euroapi’s profitability suffered again from the suspension of prostaglandin production in Hungary at the end of 2022, which has since gradually resumed. The group thus posted a core Ebitda (earnings before interest, taxes, depreciation and amortization) of 62.5 million euros, down 11.1% over one year. The corresponding margin thus contracted to 12.6% of revenues, compared to 14.5% in the first half of 2022.
Euroapi recalls that core Ebitda corresponds to the gross operating surplus restated for restructuring costs, allocations net of reversals of provisions for unused environmental risks, and other items not representative of the group’s current operating performance or related acquisitions or disposals.
The company also explains that it had to agree to a reversal of a provision of 2.5 million euros related to the tax on pharmaceutical products in Hungary, which had been recognized in 2022. It specifies that it was outside the scope of this decree in 2022, but that it remains subject to the tax in 2023.
This contraction in profitability is less than feared by the consensus of the 6 analysts covering the Euroapi stock. For their part, they were counting on a core Ebitda of 58.2 million euros and a more marked decline in the corresponding margin, to 11.7% at the end of the first half of Euroapi.
As for the net result, this amounted to 62.8 million euros compared to the 16.7 million euros for the first half of 2022. Euroapi’s half-year profits include 46.8 million euros in income from deferred taxes linked to the revaluation of the assets of Euroapi Hungary. Excluding this tax income, Euroapi specifies that its net income for the first half of 2023 would have been 16 million euros over the first six months of 2023.
In terms of prospects, Euroapi shows its confidence in its ability to achieve its 2023 objectives. For the current year, Euroapi’s management expects to achieve growth in turnover of “between +7% and +8%” , and investments of between 120 and 130 million euros. The only change to the program, Euroapi tightened its core Ebitda margin range. It is now expected between 12.5% and 13.5% against a range of 12 and 14% announced in March.
The medium-term outlook is also confirmed. Euroapi expects to achieve revenue growth of between 7% and 8% on average between 2023 and 2026, as well as a core Ebitda margin above 20% in 2026.
Euroapi’s publication has no unpleasant surprises and even reassures the market. Euroapi is at the top of the SBF 120 on Tuesday afternoon, thanks to an increase of 13.6% to 12.055 euros. The share therefore returns to its IPO price, set at 12 euros in May 2022, after having recorded a historic low of 9.52 euros on March 24, 2023. The honeymoon between the market and Euroapi is came to an abrupt end after the publication of 2022 results below targets, with prospects deemed short for 2023.
Sabrina Sadgui – ©2023 BFM Bourse
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