SKAN Group continues growth trajectory in financial year 2022

SKAN AG / Key word(s): Annual Results

28-March-2023 / 07:00 CET/CEST
Release of an ad hoc announcement pursuant to Art. 53 LR
The issuer is solely responsible for the content of this announcement.

Ad hoc announcement pursuant to Art. 53 LR
 

SKAN Group continues growth trajectory in financial year 2022

• Order intake increased by 46.9% to CHF 411.7 million; net sales up 18.2% to CHF 277.0 million.
• Record-high order backlog of CHF 360.1 million provides planning security for the next two years.
• EBITDA improved by 30.9% to CHF 40.2 million; with EBITDA margin of 14.5%, the communicated margin target was well achieved.
• Proposed dividend of CHF 0.25 per share for the financial year 2022.
• Position as number one in the high-end segment of the isolator market strengthened.
• Capacities at the production sites in Switzerland and Germany expanded and again numerous new employees hired.
• Confident outlook: Broad-based market growth, high order backlog and full project pipeline should ensure a good financial year 2023.

Allschwil, 28 March 2023 – Supported by strong market developments, the SKAN Group continued its growth trajectory in the financial year 2022. The continuing trend towards injectable drugs and thus towards its process solutions for the aseptic filling of biopharmaceutical substances ensured high demand from customers. The SKAN Group again posted record-high order intake in both business segments and across all regions in 2022. The win rate for quotations remained high, mainly thanks to the qualitative and technological superiority of the equipment as well as the process know-how of the group. As a result, SKAN once again expanded its position as number one in the high-end segment of the isolator market.

Key figures at record level

Overall, the SKAN Group recorded an order intake of CHF 411.7 million, an increase of 46.9 percent compared to the previous year. The order backlog climbed to a record level of CHF 360.1 million, which provides planning security in the equipment business for the next two years. The SKAN Group increased net sales by 18.2 percent to CHF 277.0 million. Earnings before interest, taxes, depreciation and amortization (EBITDA) grew by 30.9 percent to CHF 40.2 million, which corresponds to an EBITDA margin of 14.5 percent.

In the year under review, the SKAN Group, like other companies, was confronted by bottlenecks in the supply chain and price inflation for raw materials. The company countered this by reorganizing production processes, building up inventories and ordering key components earlier. As a result, SKAN succeeded in ensuring delivery capability, keeping productivity high and reporting record earnings despite the headwinds mentioned above. This success demonstrates the robust business model of the group.

The profit for the financial year 2022 amounts to CHF 21.4 million. The Board of Directors proposes to the Annual General Meeting of SKAN Group AG on 3 May 2023 to distribute a dividend of CHF 0.25 per share.

Financial targets well achieved

With the realized sales growth and EBITDA margin, the SKAN Group well achieved the financial targets communicated for 2022. As announced in the half-year report, the weaker first six months were compensated by a profitable second half. The reason is that in the first six months several projects were in the completion phase and numerous new orders were in the design phase – both phases that generate relatively low sales and thus also low margins in absolute terms. When the new projects entered value-intensive production phase in the second half of the year, the SKAN Group made up the shortfall in net sales and profitability as planned. The accuracy of the forecast underpins the good visibility of the business.

Equipment & Solutions segment posts strong growth

The Equipment & Solutions segment reported an order intake of CHF 336.6 million for the financial year 2022. This corresponds to an increase of 58.5 percent compared to the previous year. Based on the high order intake, net sales also increased significantly by 20.7 percent to CHF 207.7 million. The Segment EBITDA rose by 42.7 percent to CHF 23.0 million, resulting in an EBITDA margin of 11.1 percent.

Whereas in the previous year SKAN had received an above-average number of orders for high-speed systems with e-beam technology, which are suitable, among other things, for filling vaccines, customers in 2022 focused on medications that had been postponed due to the pandemic. For this reason, they invested more in systems for smaller production volumes. After the production site in Görlitz, Saxony, was geared up to manufacture both types of equipment at the beginning of the year, SKAN is now well-positioned to adapt more flexibly to such shifts in customer demand.

The Equipment & Solutions segment made good progress with its strategic initiative to expand its offering with integrated process systems. In 2022, first major projects were sold in which the SKAN Group acts as general contractor and offers a total solution consisting of its isolator including the process system supplied by a partner company.

Services & Consumables benefits from growing installed base

The Services & Consumables segment achieved an order intake of CHF 75.1 million in the 2022 financial year, 10.4 percent above the previous year. Net sales increased by 19.4 percent to CHF 69.3 million and EBITDA amounted to CHF 17.2 million, corresponding to an EBITDA margin of 24.8 percent.

One growth driver in the service business is the steady expansion of the installed base of SKAN equipment. These require maintenance, regulatory required periodic re-qualifications as well as spare parts. As the oldest isolators on the market have reached the end of their planned service life, the retrofit business is also increasing. This involves renewing the technical equipment of the isolator and updating the software so that the isolator can continue to operate for several more years.

Acceptance of the automated process solutions for closed vials from the subsidiary Aseptic Technologies continued to increase. The development pipeline of active ingredients to be filled into closed vials from Aseptic Technologies grew by around 30 percent in the year under review to an order of magnitude of approximately 400 substances. In addition, the third drug received regulatory approval for commercial production. The commercialization of drugs increases demand for closed vials and thus has a positive impact on the Services & Consumables segment. The expansion of the service business is in line with group strategy. Accordingly, SKAN increased its stake in Aseptic Technologies to 80 percent in 2022. The stake will be expanded to 90 percent by 2026 at the latest.

Pre-approved services, the implementation of which is proceeding according to plan, will also contribute to the expansion of the service business. The appropriate facility, in the immediate vicinity of SKAN's headquarters in Allschwil, is currently undergoing interior construction and equipment with the necessary systems is to start before the end of this year.

Investments in future growth

The SKAN Group invested a total of CHF 76.4 million in the financial year 2022. CHF 28.9 million of this were used for capacity expansion, particularly at the Goerlitz site. The remaining funds were invested in increasing the stake in Aseptic Technologies and temporarily in interest-bearing fixed-term deposits.

The operating cash flow grew strongly from CHF 10.3 Mio. to CHF 61.5 million due to advance payments from customers for the numerous ongoing projects. Shareholders' equity at the end of 2022 amounted to CHF 165.6 million, corresponding to an equity ratio of 42.6 percent.

New member of the management team

In order to cope with the strong growth, the SKAN Group continued to expand its workforce. At year-end 2022, the number of employees was 1,172, an increase of 165 compared to the previous year.

As of February 1, 2023, Maria Cuevas Otero has been appointed for the SKAN Group's global service business as Chief Services Officer. Maria Cuevas Otero so far spent her professional career at various companies in the industry, where besides leadership experience she also gained knowledge in digitalization. With her background she is ideally suited to successfully expand SKAN Group's service business.

Commitment to sustainability

SKAN Group products make it possible to safely fill potentially life-saving medications. Its innovative isolators reduce energy consumption by 10 to 20 times compared to conventional cleanrooms and the use of protective clothing can be largely reduced. At the same time, the SKAN Group itself acts sustainably by minimizing the negative impact of its business activities on the environment, by fulfilling its responsibility towards its employees and by being committed to society. The Sustainability Report, published as part of the annual report, provides information about SKAN’s commitment to sustainability.

Confident outlook

For the current fiscal year, SKAN expects no slow-down of the high demand momentum. The fundamental growth of the global pharmaceutical market, the trend towards injectable drugs, the shift from traditional cleanrooms to superior isolator technology and the reshoring of production sites from Asia to the Western world are expected to continue unabated. Accordingly, the demand for equipment, services and consumables from SKAN will also continue. The Board of Directors and management see the strategy confirmed and are consistently implementing it to over-proportionately participate in this growth.

The start to the current year has been encouraging and the record order backlog and full project pipeline should ensure a good course of business in 2023. SKAN group is confident to achieve its growth targets in the current year. In terms of net sales, the company expects an increase in the mid to upper teens in 2023, with both the Equipment & Solutions and Services & Consumables segments likely to grow at a similar rate. The EBITDA margin is expected between 13 and 15 percent.

Consolidated key figures

Conference Call and Audio Webcast (in English)

Thomas Huber, CEO, and Burim Maraj, CFO, will guide you through the results for the financial year 2022 and provide an outlook for the current financial year in a conference call and audio webcast. Afterwards, they will be available for questions.

Tuesday, March 28, 2023
2:30 to 3:30 p.m. (CEST)

To participate in the conference call, please register via this Link. You will then receive a confirmation e-mail with individual dial-in data. As a participant in the conference call, you can follow the presentation here.

The presentation will be broadcast as a live audio webcast. To access, please use this link. Questions can be asked via the chat function. A recording will subsequently be available under the same link.

For questions about the conference call or audio webcast, or if you have problems with the link, please contact Thomas Balmer, ir@skan.com, +41 79 703 87 28.

Download Links:

>> Annual Report 2022

>> Presentation Financial Year Results 2022
 

Contacts:

Thomas Balmer, ir@skan.com, +41 79 703 87 28
Alexandre Müller, ir@skan.com, +41 79 635 64 13

Financial calendar:

SKAN – together always one step ahead

SKAN is a pioneer in the field of aseptic and aseptic-toxic manufacturing processes for the (bio)pharmaceutical industry. The company is the market and technology leader for high-quality, process-critical isolator systems for filling drugs according to strict sterility standards. In addition, the company offers its customers process support, services and consumables. Innovative solutions and an efficient life-cycle support organization make SKAN an important partner for the pharmaceutical and biotech industry, CMOs (Contract Manufacturing Organizations) and research laboratories worldwide. Founded in 1968, SKAN today employs over 1170 people. More than half of them work at the Allschwil headquarters in the Life Sciences Hub of the Basel region. The other employees are located among the subsidiaries in Switzerland, Germany, Belgium, Japan and the USA.