Tecan reports solid underlying sales growth in the first half of
2023 and confirms its outlook for full year 2023
Ad hoc announcement pursuant to Article 53
of the SIX Exchange Regulation Listing
Rules
Tecan reports
solid underlying sales
growth in the first half of 2023 and
confirms its outlook for full
year 2023
Financial results for
the first half of
2023 – Highlights
- Sales of
CHF 541.5
million (H1
2022:
CHF 584.0 million)
- Underlying growth
of +6.8% in local currencies, excluding
effects from lower COVID-related revenues
and reduced material
cost pass-through
- Sales development of
-3.6% in local
currencies or
-7.3% in
Swiss francs, compared to
a higher basis of comparison which still benefited from
COVID-related sales
- Adjusted
EBITDA of CHF
101.2 million (H1
2022: CHF
119.1 million)
- Adjusted EBITDA margin
of 18.7% (H1
2022:
20.4%)
- Adjusted net
profit of CHF 65.8 million
(H1
2022:
CHF 80.6 million)
- Adjusted
earnings per share
of CHF 5.16
(H1
2022:
CHF 6.34)
- Outlook for full-year
2023 confirmed
Operating
highlights in the first half of
2023
- Expansion of core offering
in laboratory automation
in key growth markets
- Advancing
automation for liquid biopsy and biobanking
with launch of
Phase Separator™
to boost efficiency and accuracy in lab
workflows
- Launch of a
96 channel
pipetting arm with easy
to use software for the
Fluent® liquid handler for
high-throughput workflows
- Addition of
unique solutions
to address unmet workflow needs
for proteomics and bioanalytical
processes, nucleic acid
purification and food safety
workflows
- Expansion of
automated genomics portfolio and reagents
offering
- Several new
partnerships and product launches in
Partnering Business
- Start of
commercial supplies for several new customers in
all business lines of the Partnering Business;
strong project pipeline
- New partners cover growth
fields with first revenue contribution in 2023
- Scaling of global
manufacturing
- Series production of Tecan's
Cavro components established at Paramit's
manufacturing facilities
in Morgan Hill, USA, and Penang,
Malaysia
- First liquid
handling and detection products manufactured at
Tecan's new assembly plant in Shanghai, China, to better serve
local customers
- Further building on
sustainability activities
- Absolute
emissions reduction target set and submitted to the Science Based
Targets Initiative (SBTi) for
validation to reduce greenhouse
gas emissions in line with climate
science
- Environmental
management process has been independently audited, and ISO14001
certification achieved for Männedorf,
Switzerland, headquarters
Männedorf, Switzerland, August
15,
2023 –
The Tecan Group (SIX Swiss Exchange: TECN) delivered solid
underlying sales growth in the first half of 2023 and confirmed its
outlook for full year 2023.
Tecan CEO Dr. Achim von Leoprechting commented: «I am pleased
with our performance and the solid underlying sales growth in the
first half of the year. In a very dynamic market environment with
longer purchase decisions and cautious investment behavior among
many customers, our teams did an outstanding job of materializing
the opportunities that arose. It also stands out that we are now
much more broadly positioned across multiple growth market
segments. In addition to life science research and diagnostics
Tecan also serves the medical devices market through strong OEM
partnerships which continue to show solid growth. In addition, we
were able to launch numerous new, highly innovative products
directly or with partners in the first half of the year. With the
continued dedication of our remarkable global teams and the support
of our valued partners, we remain cautiously optimistic for the
remainder of the year, as our sales funnel and new products in the
Life Sciences Business and the combined offering in Partnering
Business have shown promising potential.»
Financial results for
the first half of
2023
Order entry for the first six months of the year was CHF 536.6
million (H1 2022: CHF 600.5 million), down 10.6% year-on-year, or
7.1% in local currencies compared to the substantial order entry
achieved in the first half of 2022. In the prior-year period,
COVID-related orders still contributed to the high order intake. In
addition, higher inventories, for example of OEM components, were
created by customers due to disrupted supply chains. As supply
chains largely normalized in the first half of 2023, customers no
longer needed to place orders as far in advance as they did in the
prior-year period. As a result, the book-to-bill ratio also
returned to normal at a level of around 1.
Reported sales in the first half of 2023 decreased by 7.3% in
Swiss francs and 3.6% in local currencies to CHF 541.5 million (H1
2022: CHF 584.0 million or CHF 561.8 million when
compared in local currencies). Underlying sales, on the other hand,
increased by 6.8% in local currencies, excluding the effects of
lower COVID-related sales and a lower pass-through of material
costs compared to the prior-year period (estimated net effect of
CHF -48m in local currencies and CHF -7m, respectively).
Adjusted operating profit before depreciation and amortization
(earnings before interest, taxes, depreciation and amortization;
EBITDA) decreased by 15.0 % to CHF 101.2 million, mainly related to
the lower sales volumes (H1 2022: CHF 119.1 million). The adjusted
EBITDA margin amounted to 18.7% of sales (H1 2022: 20.4%).
Adjusted net profit1 amounted to CHF 65.8 million (H1 2022: CHF
80.6 million), while adjusted earnings per share1 reached CHF 5.16
(H1 2022: CHF 6.34). Reported net profit for the first half of 2023
was CHF 53.2 million (H1 2022: CHF 65.7 million). This figure
includes integration-related costs in connection with the Paramit
acquisition (CHF 5.0 million) as well as the accumulated
amortization of acquired intangible assets (CHF 9.9 million).
Cash flow from operating activities increased by 17.3% to
CHF 82.5 million in the first half of 2023 (H1 2022:
CHF 70.3 million). In the prior-year period, inventories and
safety stocks increased to ensure delivery capability in times of
tight material supplies. These inventories have now been
increasingly reduced again, and further reductions are expected by
the end of the fiscal year. Thanks to the strong cash flow, Tecan’s
net liquidity position (cash and cash equivalents plus short-term
time deposits less bank liabilities, loans and the outstanding
bond) increased to CHF 61.7 million (December 31, 2022: CHF 41.2
million).
Information by business segment
Life Sciences Business (end-customer
business)Sales in the Life Sciences Business reached
CHF 228.6 million (H1 2022: CHF 259.1 million or
CHF 246.6 million in local currencies), a decrease of 11.8% in
Swiss francs or 7.3% in local currencies compared to the first half
of 2022. In contrast, underlying sales increased by 5.1% in local
currencies, excluding the impact of lower COVID-related sales
compared to the same period last year (estimated net effect of CHF
-29 million in local currencies, based on an allocation of 60% of
total COVID-related sales in H1 2022). Thanks to good growth in the
service business due to the higher installed base of instruments,
recurring sales of services, consumables and reagents increased to
51.5% of segment sales (H1 2022: 50.9%).Underlying demand for life
science research and diagnostics solutions remained solid in many
application areas, despite ongoing global economic uncertainties
and more cautious spending patterns overall. In addition to good
demand for existing products such as DreamPrep®
NGS, newly launched products for growth areas have already enjoyed
strong interest in the market, for example for liquid biopsies and
biobanking, as well as new modules for the Fluent platform that
enable high-throughput applications. With order entry at the same
level as sales, the book-to-bill ratio reached 1. Excluding
COVID-related orders, the Life Sciences Business segment recorded
its highest-ever order entry in a first half-year.
Reported operating profit in this segment (earnings before
interest and taxes; EBIT) reached CHF 40.3 million (H1 2022: CHF
53.2 million). The operating profit margin amounted to 17.2% of
sales (H1 2022: 19.5%), mainly due to the lower sales volumes in
the first half of the year.
Partnering Business (OEM
business)The Partnering Business generated sales of
CHF 312.9 million in the period under review (H1 2022:
CHF 324.9 million or CHF 315.2 million in local
currencies), which corresponds to a decrease of 3.7% in Swiss
francs. Sales were down 0.7% in local currencies. Underlying sales
increased by 8.2% in local currencies, excluding the impact of
lower COVID-related sales and a lower pass-through of material
costs compared to the same period last year (estimated net effect
of CHF -19 million in local currencies and CHF -7 million,
respectively). Paramit reported strong double-digit growth
supported by the fulfilment and subsequent revenue recognition of
the high order backlog from 2022 and some pent up demand for
medical products in the first half of the year. By contrast, sales
of Cavro OEM components declined substantially, as these products
had experienced a significant surge in demand in the prior-year
period to mitigate disruptions in the supply chain and in the
run-up to the transfer of production to two Paramit manufacturing
sites.Underlying demand in Partnering Business remained solid and
as order entry was only marginally lower than sales, the
book-to-bill ratio was close to 1.
Reported operating profit in this segment (earnings before
interest and taxes; EBIT) amounted to CHF 30.8 million (H1
2022: CHF 35.5 million), while the operating profit margin
reached 9.8% of sales (H1 2022: 10.9%). The integration costs (CHF
5.0 million; H1 2022: CHF 3.3 million) and amortization of acquired
intangible assets in connection with the acquisition of Paramit
were recognized for the Group in the Partnering Business segment.
Other factors negatively impacting the segment margin were the
lower sales volumes with corresponding negative economies of scale
and a more negative product mix.
Additional information
Regional development
In Europe, Tecan's sales in the first six months of 2023 were
still affected by a COVID-related high comparison base and
developed accordingly with -18.0% in Swiss francs and -15.1% in
local currencies. Against this high comparative basis, sales in the
Life Sciences Business were 20.1% lower than the previous year in
local currencies, and in the Partnering business they declined by
11.0% in local currencies.
In North America, sales grew by 3.5% in Swiss francs and by 6.9%
in local currencies. Despite the high COVID-related basis of
comparison and more cautious spending behavior, sales in the Life
Sciences Business segment declined by only 1.8% in local
currencies. The Partnering Business segment, on the other hand,
reported a 13.2% increase in sales in local currencies, driven by
strong sales growth at Paramit, which more than offset
COVID-related sales in other product categories from the first half
of 2022.
In Asia, sales decreased by 16.4% in Swiss francs and 10.4% in
local currencies against a high COVID-affected comparative base,
particularly in Japan. Due to the high basis of comparison, sales
of the Partnering Business segment decreased by 26.7% in local
currencies. The Life Sciences Business segment, on the other hand,
recorded a 9.6% increase in sales in local currencies, with sales
in China growing at the same rate as the Life Sciences Business in
the Asia region as a whole.
Operating highlights
for the first half of 2023
Tecan further expanded its core offering in laboratory
automation in key growth markets in the first half of this year.
With the launch of Phase Separator™, Tecan is advancing automation
for high-growth liquid biopsy and biobanking applications to boost
efficiency and accuracy in clinical, medical research and pharma
lab workflows. Phase Separator is an innovative new pipetting
capability available on the Fluent® Automation Workstation and
represents a significant advance in liquid-separation technology of
whole blood and other complex samples.The newly launched MCA 96, a
pipetting arm with 96 channels for the Fluent liquid handler
together with an easy-to-use software offers an extremely wide
volume range ideal for high-throughput workflows. The
field-upgradeable MCA 96 with optional gripper can be combined with
other arms – including another MCA 96 or an MCA 384 – to increase
throughput even further.With the launch of the Resolvex A200 Omics
and Resolvex A200 24, Tecan added unique solutions to its broad
automation portfolio to address unmet workflow needs for proteomics
and bioanalytical processes, nucleic acid purification and food
safety workflows.The company also expanded its automated genomics
portfolio and reagents offering. Among the various partnerships
entered into in the first half of the year, Tecan and Oxford
Nanopore build an alliance to create automated, seamless and fully
compatible nanopore sequencing library preparation for any-length
fragments of native DNA/RNA. To further expand its reagents
offering, Tecan developed the first in a series of specialist
reagent kits for its MagicPrep NGS library preparation system. The
first kits are tailor-made for the Singular Genomics’ G4 Sequencing
Platform.
In the Partnering Business, Tecan concluded several new
partnerships and supported various customers with product launches
and the start of commercial supplies in all business areas of the
Partnering Business. This includes customized OEM systems, OEM
components as well as contract development and manufacturing
services. The partners are engaged in growth areas in key
applications in life science research, diagnostics and the medical
market with an initial revenue contribution for several customers
as early as 2023. The project pipeline for new development and
manufacturing projects remains rich and the broad OEM offering with
strong synergies between the individual offerings is well
received.
In the first half of 2023, Tecan continued to scale its global
production and operational footprint. With Paramit Corporation now
a fully integrated subsidiary of Tecan, the transfer of Cavro
component production from its US site in San Jose, California, to
the Paramit facilities in Morgan Hill, California, and Penang,
Malaysia, progressed well and series production has now been
successfully established at the new sites. This expansion of
production capacity for Tecan's Cavro OEM components will also make
it possible to meet the planned increase in demand for these
products in the future.As a step in executing the strategy to serve
local customers in China even better and meet their specific needs,
Tecan opened a new assembly facility in the Shanghai Free-Trade
Zone (SFTZ), where liquid handling and detection products were
already manufactured in the first half of the year. The new site
also fulfills local manufacturing requirements for goods destined
for the Chinese market (“China for China” initiative) and offers
new opportunities to advance Tecan’s business in China.
Tecan’s commitment to greenhouse gas emissions reduction took a
further step forward in the first half of 2023, with an absolute
emissions reduction target set and submitted to the Science Based
Targets Initiative for validation. Tecan commits to reach net-zero
greenhouse gas emissions across the value chain (scopes 1, 2 and 3)
by 2050. The related targets are set out in the 2022 Annual Report,
and include a commitment to purchase 100% renewable electricity by
2025.In addition, the environmental management process has been
independently audited, and ISO14001 certification achieved for
Tecan’s Männedorf headquarters. The 2022 Sustainability Report
provides a comprehensive overview of Tecan’s sustainability program
and was published as part of the Annual Report 2022 on the
corporate website in March.
Outlook for full-year
2023 confirmed
Tecan confirms its full-year 2023 outlook and continues to
forecast sales to increase in the low to mid single-digit
percentage range in local currencies. This expectation includes the
negative impact of lower COVID-related sales (approximately -4
percentage points for the full year 2023, with the largest share of
the impact already recorded in the first half of the year) and the
reduced pass-through of material costs (at least -1 percentage
point). Underlying sales, which exclude these negative effects, are
expected to grow in the high single-digit percentage range in local
currencies.
Tecan also continues to expect an adjusted EBITDA margin,
excluding acquisition and integration-related costs, at least at
around 20% of sales. This outlook assumes lower integration costs
in 2023 compared to 2022. In contrast, Tecan expects the reported
EBITDA margin to increase by 20-30 basis points in 2023 despite
ongoing inflationary pressures.
The expectations regarding profitability are based on an average
exchange rate forecast for full year 2023 of one euro equaling CHF
1.00 and one US dollar equaling CHF 0.92.Integration and
acquisition-related costs are expected to be in the low-teens of
millions in Swiss francs in 2023, the accumulated amortization of
all acquired intangible assets is expected to amount to around CHF
20 million.The outlook 2023 does not take account of potential
acquisitions during the course of the year.
Tecan also confirms the mid-term outlook published in March
2023.
Financial Report and Webcast
The full 2023 Interim Report can be accessed on the
company’s website www.tecan.com under Investor Relations.
Tecan will hold an analyst and media conference to
discuss the results in the first half of 2023 today at 09:00 (CET).
The presentation will also be relayed by live audio webcast, which
interested parties can access at www.tecan.com. A link to the
webcast will be provided immediately prior to the event.
The dial-in numbers for the conference call are as
follows:For participants from Europe: +41 (0)58 310 50 00 or +44
(0)207 059 107 0613 (UK)For participants from the US: +1 (1) 631
570 5613
Participants should if possible dial in 15 minutes
before the start of the event.
Key upcoming dates
- The 2023 Annual Report will be
published on March 12, 2024
- The Annual General Meeting of Tecan’s
shareholders will take place on April 18, 2024
1 The calculation of adjusted net profit and adjusted earnings
per share excludes acquisition and integration costs (+CHF 5.0
million) as well as the accumulated amortization of acquired
intangible assets (+CHF 9.9 million) and they were calculated with
the reported Group tax rate of 15.1%.
About TecanTecan
(www.tecan.com) improves people’s lives and health by empowering
customers to scale healthcare innovation globally from life science
to the clinic. Tecan is a pioneer and global leader in laboratory
automation. As an original equipment manufacturer (OEM), Tecan is
also a leader in developing and manufacturing OEM instruments,
components and medical devices that are then distributed by partner
companies. Founded in Switzerland in 1980, the company has more
than 3,500 employees, with manufacturing, research and development
sites in Europe, North America and Asia, and maintains a sales and
service network in over 70 countries. In 2022, Tecan generated
sales of CHF 1,144 million (USD 1,192 million; EUR 1,144 million).
Registered shares of Tecan Group are traded on the SIX Swiss
Exchange (TECN; ISIN CH0012100191).
For further information:
Tecan GroupMartin BrändleSenior Vice President,
Corporate Communications & IRTel. +41 (0) 44 922 84 30Fax +41
(0) 44 922 88
89investor@tecan.comwww.tecan.com
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