THIRD QUARTER INTERIM REPORT PRESENTATION 9 NOVEMBER 2017
THOMAS ELDERED CEO
THIRD QUARTER 2017 Continued focused strategy implementation Sales adjusted for Fx and acquisitions -0.8% YoY 16% Sales, YoY growth Adjusted for Fx and acquisitions 16% EBITDA margin 8.6% (12.6) 6% 6% 5% Third quarter holiday and maintenance shutdowns Delays in Wasserburg, Bengaluru and the US Impact from ongoing expansion projects Swedish operations underperforming Operating cash flow at 149 MSEK Balancing capex Events after closing -3% -1% Q1 2016 Q2 Q3 Q4 Q1 2017 Q2 Q3 139 Operating cash flow (MSEK) 180 83 154 149 Intention to end operations in Stockholm and Höganäs -60-25 Q1 2016 Q2 Q3 Q4 Q1 2017 Q2 Q3 3
STRATEGY EXECUTION PROGRESS Several potential portfolio outsourcing projects agreement with Roche Increased number of development projects, building an encouraging pipeline of products new to the market. Launched Recipharm Pathway to Clinic Focused efforts in own products and technologies, support to erdosteine Implementation of contracts and new contract wins in Bengaluru Strong development in underlying manufacturing business with a large number of tech transfers ongoing, including customers for expanded capacity in Sterile Liquids segment Continued review of less profitable customer contracts Streamlining of operations and exploring opportunities with our global structure intention to end operations in Stockholm and Höganäs communicated after the period end 4
ONGOING SIGNIFICANT CAPEX PROJECTS UPDATE 1 2 3 4 Lyophilisation and packaging capacity expansion in Wasserburg, Germany Staff training and test runs ongoing Capex will be finished in Q4-17, material start-up opex Ramp-up of commercial supply expected to begin end of Q1-18 Blow-fill-seal capacity expansion in Kaysersberg, France Test runs to start during Q4-17 Capex will finish Q1-18, revamping in Q3-17 impacting sales and profit Ramp-up of commercial supply expected during Q2-18 Lyophilisation capacity expansion in Masate, Italy Capex on-going, expected finish Q3-18 Commercial supply expected during Q4-18 Serialisation technology, globally Implementation on-going, according to plan Main impact expected from Q2-19 5
EVENT AFTER THE PERIOD INTENTION TO END OPERATIONS IN STOCKHOLM AND HÖGANÄS Will address underperformance in Swedish operations Current EBITDA run rate 25 SEK million p.a. Expanded network in Solids and Others offers opportunities to optimize and streamline Will affect approximately 225 employees, negotiations with unions will start today Contracts will be terminated, customers offered continued supply from other parts of Recipharm s manufacturing network Non-recurring costs expected to be charged Q4-17 Operations expected to end 2018 (Höganäs) and 2019 (Stockholm) An important step in overall streamlining operations strategy Will improve competitiveness, efficiency and improve market position 6
HENRIK STENQVIST CFO (currency SEK million)
Q3 P&L DEVELOPMENT Q3 2017 Q3 2016 Net Sales 1 200 1 138 EBITDA 103 144 EBITDA margin 8,6 12,6 D&A -120-100 EBIT -17 44 Financial Items -46-22 Profit before Tax -63 22 Tax 9-10 Net Profit -54 12 8
MANUFACTURING SERVICES STERILE LIQUIDS SALES BRIDGE, JULY SEPTEMBER Sales, MSEK Sales, % 2016 499.0 Currency 0.6 0.1 Acquisitions 0.0 0.0 Organic growth -12.1-2.4 Total -11.4-2.3 2017 487.6 520 500 480 460 440 420 400 Q3 2016 Currency Organic growth Q3 2017 EBITDA BRIDGE, JULY SEPTEMBER SEK million EBITDA 2016 86.5 Currency -0.7 Acquisitions 0.0 Other -27.7 Total -28.4 2017 58.1 100 90 80 70 60 50 40 30 20 10 0 Q3 2016 Currency Other Q3 2017 9
MANUFACTURING SERVICES SOLIDS & OTHERS SALES BRIDGE, JULY SEPTEMBER Sales, MSEK Sales, % 2016 507.7 Currency -0.9-0.2 Acquisitions 61.4 12.1 Organic -26.6-5.2 Total 33.9 6.7 2017 541.6 EBITDA BRIDGE, JULY SEPTEMBER SEK million EBITDA 2016 25.7 Currency -0.1 Acquisitions 2.9 Other -16.7 Total -13.9 2017 11.8 580 560 540 520 500 480 460 440 420 400 60 50 40 30 20 10 0 Q3 2016 Currency Acquisitions Organic growth Q3 2017 Q3 2016 Currency Acquisitions Other Q3 2017 10
DEVELOPMENT & TECHNOLOGY SALES BRIDGE, JULY SEPTEMBER 300 250 2016 161.3 Sales, MSEK Sales, % Currency -0.6-0.4 Acquisitions 11.2 7.0 Organic 35.7 22.1 Total 46.2 28.7 2017 207.5 EBITDA BRIDGE, JULY SEPTEMBER 200 150 100 50 0 60 Q3 2016 Currency Acquisitions Organic growth Q3 2017 SEK million EBITDA 2016 36.4 Currency 0.4 Acquisitions 1.0 Other 10.4 Total 11.8 2017 48.2 50 40 30 20 10 0 Q3 2016 Currency Acquisitions Organic growth Q3 2017 11
EBITDA BRIDGE VS Q3 2016 180,0 160,0 Capacity Expansion sites 140,0 120,0 Q3 2016 Swedish Operations Development & Technology Other 100,0 80,0 Q3 2017 60,0 40,0 20,0 0,0 12
CASH FLOW BY QUARTER msek Q1 Q2 Q3 YTD Operating Cash Flow 81 192 3 276 Changes in Working capital -106-38 146 2 Operating cash flow after w.c. -25 154 149 278 Maintenance capex -65-70 -68-202 Free cash flow -89 84 81 76 Expansion capex -971-128 -86-1185 Cash flow after investing activities -1060-44 -4-1109 13
THOMAS ELDERED CEO
EXECUTING ON OUR FOCUSED STRATEGY Q3: Not where we should be, and not where we will be Contributions to growth and profitability Commercial supply from all three major expansion projects Manufacturing network optimization and streamlining Important contract wins, with Roche as the largest Gradual catch-up in Bengaluru, India Optimised development offering On track to reach our financial targets Sales target of at least SEK 8 bn by 2020 At least 16% EBITDA margin 15
Q&A
CONTACT INFORMATION Thomas Eldered CEO & Managing Director +46 (0)8 602 52 00 Henrik Stenqvist CFO & EVP +46 (0)8 602 52 00, ir@recipharm.com 17