(Boursier.com) — The NEOLIFE Group presents a turnover of 6,591 K for the first half of 2022, i.e. a growth of 34% compared to the first half of 2021.
“The continuation of this growth once again demonstrates the market’s growing interest in our bio-based products. This growth is achieved despite the fact that the building sector is experiencing disruptions and delays in terms of acceptance and delivery of works, due to a lack of supply of materials on other lots (joinery, openings, frames)” comments the group.
The growth in turnover is explained by volumes up 8% (52,000 m(2) sold vs 48,000 m(2) in the first half of 2021). The 30% increase in selling prices also explains the growth in turnover.
“Despite numerous efforts to maintain our raw material purchase prices, the NEOLIFE Group had to face a sharp rise in these prices (50% on average for our main materials, including the compound which represents 80% of the price of purchase of our materials).
These increases occur in an unprecedented and global context making alternative solutions limited.
The other items linked to the gross margin, such as packaging, also increased.
Logistics and storage costs have been contained thanks to better management and optimization of flows.
Certain provisions on raw materials had also been undervalued in 2021, thus negatively impacting the first half of 2022, by approximately 100 KEUR.
This sharp increase in raw materials was only passed on up to 30% so as not to break the business dynamic of the contracts signed 1 to 2 years ago.
Thus, the Group has seen a deterioration in its margin rate of 4 points compared to the same period last year (25% vs 29% in the first half of 2021). At a constant margin rate, the Group would have generated a margin of 1,911 KE, or 255 KE more.
Actions are underway to restore this margin rate in the short term: expansion of the range of products to increase the average sales basket, indexation of selling prices on the price of raw materials, revision of selling prices on a monthly basis.
The budget work for the year 2023 must make it possible to reconcile all these actions inherent in turnover (price and volume) and gross margin.
Operating result
In the first half of 2022, the NEOLIFE Group faced significant increases in certain items, due to specific and one-off events. In addition, the Group’s strong growth has led to an increase in variable expense items. Certain fixed costs are also on the rise in order to support growth and prepare for the future.
More specifically, personnel costs increased in the first half of 2022, due to an increase in the average workforce, from 17 employees to 19 employees, as well as salary increases following commitments made in 2021. overall impact amounts to 170 KE over the first half of 2022.
It is also worth noting the observation over the period of specific events up to 100 KE.
Finally, an increase in provisions for variable compensation (commissions and bonuses) should be noted in the first half of 2022; these items were only partially provisioned in the first half of 2021 and the payment method for these items has also changed.
The first half of 2022 is therefore marked by a context of high inflation coupled with non-recurring items generating one-off charges. Without these elements, the Group would have improved its operating income by around 525 thousand, i.e. almost all of the operating loss recorded in the first half of 2022.
Actions are taken at all levels to control our costs thanks to the implementation of management tools. The continued growth of our turnover should make it possible to cope with these increases and also to reduce the fixed costs necessary for the development of the Group.
The financial result is improving due to gradual debt reduction and financial products.
The exceptional result is explained by a provision of 25 KEUR following an URSSAF inspection for the 2019 and 2020 financial years. Certain topics are however disputed.
The 2020 financial year was marked by the scrapping of fittings from the previous premises (50 KE). The NEOLIFE Group having effectively moved during 2021.
Following the deterioration of EBITDA, the gross cash flow is negative at -317 K.
The increase in the working capital requirement (267 K), correlative to the growth of the Group and therefore to an increase in the level of stocks, also impacts the net flows generated by operations. These are negative at -584 KEUR.
The net flows related to the investment amount to -132 KE. The latter are less important than in the first half of 2021 due to a decline in research and development activity and the absence of investments, such as the sector. The Group is paying today – both at the level of ‘R&D’ and of the CIR (Research Tax Credit) – for the lack of ambition and long-term strategy in this area since 2019/2020. These two items are therefore intended to fade in 2022 and 2023.
Net flows linked to financing amount to -394 K. These are loan repayments, including PGEs taken out during COVID. 795 KE of reimbursements are planned for the year 2022.
Next financial communication on October 31, 2022 with the turnover for the 3rd quarter of 2022.