Analysis of 3Q23 Results: Gross Profit Decline, Operating Expenses, and Receivable Challenges

Result and operating expenses

Gross profit on sales in 3Q23 amounted to PLN 14.5 million (-33% y-o-y), and the margin dropped from 37% to 29% due to the sales structure between Poland and foreign markets and a change related to higher sales of vials than cartridges (sales to Libya and no sales to China).

In addition, margins were negatively impacted by production downtime costs mainly related to the shutdown of the substance production plant associated with production line modernization work.

The company said that, as of the date of publication, it had not received a receivable from Yifan in the amount of PLN 8.8 million for work performed on the Glargine project, including the costs of the API substance plant shutdown during its modification.

The company has issued a demand for payment to Yifan and is strictly following the procedure set forth in the cooperation agreement with Yifan. Selling, general and administrative expenses totaled PLN 18.9 million (+14% y/y).

EBITDA in 3Q23 amounted to PLN 3.9 million (-69% y/y), and EBITDA adjusted for the balance of other operating activities amounted to PLN 0.1 million (vs. PLN 11.6 million a year ago), net income amounted to PLN -4.4 million (vs. PLN -1.9 million a year ago).