2Q23 Financial Performance Review: Steady Revenues, Challenges in Insulin Sales, and Margin Adjustments
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Consolidated revenues in 2Q23 amounted to PLN 49 million (+2% y/y), and were similar to the same period last year. Lower insulin sales by PLN 10 million (mainly in foreign markets) were offset by higher sales of goods and materials (including oral diabetes drugs) and a higher invoiced amount resulting from the settlement of the analog project with Yifan. Gross profit on sales was PLN 18.8 million (-18% y/y), and the margin was lower y/y due to a different product mix.
Selling expenses increased by 8% y/y, and general and administrative expenses were stable y/y. In addition, other operating income had a positive impact on the operating result, including, among others, a gain on the disposal of real estate in the amount of about PLN 2 million. EBITDA in 2Q23 amounted to PLN 15.6 million and was similar y/y, while EBITDA adjusted for the balance of other operating income and expenses amounted to PLN 12.4 million (-17% y/y). Net profit in 2Q23 amounted to PLN 1.4 million and was similar y/y. Cash flow from operations in 1H23 amounted to +PLN 11 million (vs. +PLN 25.2 in 1H22) - the decrease is mainly due to higher commitment of funds to working capital. Net CAPEX in 1H23 amounted to about PLN 16 million and was similar y/y. Net debt at the end of H1 amounted to PLN 76 million (vs. PLN 71 million at the end of 1Q23). We rate the results neutral.
Revenues
Revenues in 2Q23 amounted to PLN 49 million (+2% y/y). Insulin sales fell 27% y/y, mainly due to a decline in export sales. The decline in insulin was offset by higher revenues from sales of goods (mainly Avamina, Avamina SR and Sitagliptin - new implementation) and higher sales of services, i.e. settlement of the analog project. For the whole of H1 2023, the decrease in insulin sales was 35%, while increases in the materials area were +54%. Overall, sales in the period declined by 15% y/y
Operating profit and costs
Gross profit on sales in 2Q23 was PLN 18.8 million (-18% y/y), and the margin dropped from 48% to 38% due to a different product mix. Selling, general and administrative expenses are under control and totaled PLN 16.5 million (vs. PLN 15.8 million in 2Q22, +4% y/y). EBITDA in 2Q23 was PLN 15.6 million (+2% y/y), and EBITDA adjusted for the balance of other operating activities was PLN 12.4 million (-17% y/y), net income was PLN 1.4 million (flat y/y). The operating result was positively impacted by a gain on the disposal of real estate in the amount of approximately PLN 2 million reported in other operating income. Last valuation: 5.34 PLN/share as of 20.04.2023. Price on the day of issue 3.54 PLN.
