SKAN Group reaches its targets in the first half of 2024

SKAN AG / Key word(s): Half Year Results

20-Aug-2024 / 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 reaches its targets in the first half of 2024

• Net sales increased by 17.2% to CHF 163.7 million, EBITDA by 15.7% to CHF 21.5 million; net sales growth and EBITDA margin of 13.1% within the target corridor of the guidance.
• Order intake of CHF 177.2 million well above the second half of 2023; order backlog of CHF 328.0 million offers planning security for over a year.
• Both business segments with double-digit growth; Services & Consumables growing faster and more profitably in line with strategy.
• Strategic initiatives for integrated process systems and a higher degree of standardization in the equipment business as well as for pre-approved services are on track.
• Based on the solid half-year and the good order backlog, SKAN confirms its guidance for the full year 2024.

Allschwil, 20 August 2024 – The SKAN Group AG, world market leader for high-quality isolator systems for aseptic production processes in the (bio-) pharmaceutical industry, continued its growth trajectory in the first half of 2024. The good business performance was supported by a robust environment in which the key drivers – the fundamental development of the (bio-) pharmaceutical market and the increasing importance of injectable drugs – remained strong. While a temporary reluctance on the part of customers was noticeable in the second half of 2023 because they had to digest the exceptionally high order volumes during Covid, this backlog cleared over the course of the first half of 2024 and the market is once again ordering what is needed.

Thomas Huber, CEO of SKAN Group, commented: “The order intake is in line with our expectations and the order pipeline remains well-filled. It is also pleasing to note that the services and consumables business is growing very dynamically – in line with the SKAN Group's strategy. Importantly, the SKAN Group remains excellently positioned in the market thanks to its reputation, the quality and innovative nature of its systems and its unique process expertise.”

Sales growth and margin within the guidance target range

The SKAN Group reported incoming orders of CHF 177.2 million for the first half of 2024. Although this is only slightly more than in the same period of the previous year, it is 47.9% higher than in the second half of 2023. The order backlog has increased by 5.1% compared to the beginning of the year and stood at CHF 328.0 million at the end of June, which continues to provide the SKAN Group more than one year of planning certainty in the equipment business.

Net sales increased by 17.2% to CHF 163.7 million in the first half of 2024. Earnings before interest, taxes, depreciation and amortization (EBITDA) reached CHF 21.5 million and the EBITDA margin 13.1%. This means that sales growth and the EBITDA margin are within the target corridor of the guidance for 2024. The weakening of the margin compared to 2023 is due to the typical periodicity of major projects: In the first six months of 2024, many projects were in the early design or the completion phase. In these two phases, the billable value added is comparatively lower than during the material-intensive production phase. The SKAN Group expects a stronger second half of the year in terms of value added and profitability.

The multi-year initiative to increase the level of standardization of our systems had a significant impact on costs but will have a positive effect on profitability in the coming years. By increasing our workforce by over 150 employees in the past twelve months, we have laid the foundations for further growth. With a view to increasing customer proximity, SKAN has pushed ahead with decentralization and hired new employees – in relative figures – mainly at its locations abroad. Our in-house training program SKAN Academy was also rolled out in Germany and the USA.

Earnings before interest and taxes (EBIT) amounted to CHF 15.2 million in the first half of 2024, 22.5% more than in the same period of the previous year. Profit increased by 68.0% to CHF 14.7 million. The reasons for the pleasing growth were the good business performance in the first half of 2024 as well as a positive financial result and an improved tax rate.

Equipment & Solutions drives strategic initiatives forward

The Equipment & Solutions segment generated an order intake of CHF 124.9 million in the first half of 2024. This represents a slight year-on-year decline, which is attributable to customers' initial reluctance to invest. Compared to the second half of 2023, however, incoming orders increased by 46.9%. Net sales rose by 16.6% to CHF 120.1 million. The SKAN Group's delivery times have now normalized. There are still occasional backlogs in the installation and commissioning of customer projects that were ordered during Covid and have now been delivered. For SKAN, the completion of these projects and the realization of the remaining share of sales are therefore delayed.

Segment EBITDA amounted to CHF 8.9 million in the first half of 2024, resulting in an EBITDA margin of 7.4%. The year-on-year decline is due to the previously mentioned periodicity of the business. In addition, production capacity utilization in Görlitz, Germany, was slightly lower, as customers ordered more large high-speed systems in relative terms, which are primarily manufactured at the Swiss sites.

SKAN again spent a significant amount, 7.7 percent of Group sales, on its strategic initiatives in the area of integrated process systems and standardization as well as on general research and development activities. Both initiatives are developing according to plan. The SKAN Group has set up a dedicated team for the standardization initiative, which is working with our partners to drive forward the standardization of processes and components.

Services & Consumables increases profitability

The Services & Consumables segment achieved an 11.1% increase in order intake to CHF 52.3 million in the first half of 2024. Net sales rose by 18.9% to CHF 43.6 million. As a result of this relatively stronger growth, the Services & Consumables segment's share of the SKAN Group's total sales increased further in line with strategy and now stands at 27%. EBITDA increased by 39.1% to CHF 12.6 million. This corresponds to an EBITDA margin of 28.9%.

The growth drivers in the reporting period were life cycle support and spare parts for installed SKAN isolators worldwide on the one hand, and higher sales of AT-Closed Vials® and filling kits from our Belgian subsidiary Aseptic Technologies on the other. The automated process solutions for closed vials are now used for seven commercial products that have received approval in a total of 16 regions. In the reporting period, Aseptic Technologies also acquired new customers outside the traditional field of cell and gene therapies, thereby broadening its application portfolio.

The SKAN Group has made good progress with its pre-approved services project so far this year. The building has been completed. In August, the first filling equipment was brought in, on which customers will be able to carry out their stability tests in the future, and validation of the systems has begun. We expect to receive regulatory approval by the end of 2025 and to start commercial use from 2026.

Investing in the future

At CHF 22.2 million, SKAN invested more than twice as much in the first half of 2024 as in the same period of the previous year. The main reasons for this were the expansion of pre-approved services and the increase in the stake in Aseptic Technologies by 5% to 90%, which accounted for the majority of investments. The remaining funds were used to expand capacity in Switzerland and Belgium. The SKAN Group's equity amounted to CHF 178.6 million as at June 30, 2024, which corresponds to a very solid equity ratio of 50.7%.

Confident outlook and confirmation of guidance

The SKAN Group expects demand for its process solutions for the aseptic filling of biopharmaceutical active ingredients to remain at a high level. The underlying growth of the global (bio-) pharmaceutical market and the increasing trend towards injectable drugs will continue. Other market drivers include the shift from traditional cleanrooms to more advanced isolator technology and the boom in GLP-1 anti-obesity drugs, which require aseptic filling solutions. As the market and technology leader, the SKAN Group will participate in the growth of its market.

In light of this, demand for SKAN's systems, services and consumables will continue for the rest of the year, as evidenced by the well-filled order pipeline. The high order backlog makes it possible to absorb short-term fluctuations in incoming orders. Due to the typical periodicity of major projects, we expect the second half of 2024 to be stronger than the first half in terms of net revenue and profitability. Accordingly, the SKAN Group confirms its guidance for 2024 as a whole: at the net sales level, we expect an increase in the mid-to-upper teens with an EBITDA margin between 13 and 15 percent.

Consolidated key figures

¹ nicht vergleichbar (not meaningful)

Conference Call and Audio Webcast (in English)

Thomas Huber, CEO, and Burim Maraj, CFO, will explain the 2024 half-year results and provide an outlook for the current financial year. Following the presentation, they will be available for your questions. The conference call and audio webcast in English will take place as follows:

Tuesday, August 20, 2024
10.00 a.m. to 11.00 a.m. (CEST)
 

To participate in the conference call, you may pre-register under this link and will receive the dial-in details to access the call. As a participant of the telephone conference you can follow the presentation here (please mute the browser sound).

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 and on the SKAN website.

If you have any questions, please contact ir@skan.com, +41 79 703 87 28.

Download Links:

>> Half-Year Report 2024

>> Presentation Half-Year Results 2024
 

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 organisation make SKAN an important partner for the pharmaceutical and biotech industry, CMOs (Contract Manufacturing Organisations) and research laboratories worldwide. Founded in 1968, SKAN today employs approximately 1400 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, the USA and Brazil.