Galenica Ag · SIX:GALE
Galenica — H1 2018 Earnings Presentation
25 slides from Galenica's earnings presentation, Aug 7, 2018
Slide 1: Galenica Group Half-year results 2018
Galenica Group Half-year results 2018 Conference call, 7 August 2018 2 p.m. CEST Galenica - the first choice for health, beauty and wellbeing
Slide 2: Agenda
Galenica Group – Half-year results 2018 Agenda: Summary 1st half year 2018 and outlook Jean-Claude Clémençon, CEO Group financial results 1st half year 2018 and guidance 2018 Felix Burkhard, CFO Q&A session All 07.08.2018 − © Galenica Group 2
Slide 3: Summary of 1st half year 2018
Summary of 1st half year 2018 “Our strong development is based on expansion, innovation and on our continuing focus on efficiency improvements.” Jean-Claude Clémençon, CEO 07.08.2018 − © Galenica Group 3
Slide 4: First half year 2018: result and profitability significantly improved
First half year 2018 Result and profitability significantly improved 1. Solid sales growth +0.9% affected by price reduction measures 2. EBIT increased +7.5% on a comparable basis 3. Net profit increased +8.2% on a comparable basis 4. ROS improved 4.8% (PY: 4.5%) on a comparable basis 07.08.
Slide 5: Retrospect 1st HY 2018: further progress on development axes
Retrospect 1st HY 2018 Further progress on our 3 development axes Expansion Innovation Efficiency 07.08.2018 − © Galenica Group 5
Slide 6: Expansion: new locations and expansion of offerings
Expansion New locations – expansion of offerings − 500 pharmacies Since July: “Bahnhof Apotheke” pharmacy in Zurich main station − Click & Collect: 16,000 items Target by end of 2018: 40,000 items − Careproduct Strengthening of online market position & offering 07.08.2018 − © Galenica Group 6
Slide 7: Retail innovations
Retail innovations Contribution to reducing healthcare cost evolution - new services Generics Check Distance healthcare 07.08.2018 − © Galenica Group 7
Slide 8: Services innovations
Services innovations Drug and patient safety - sustainability Galexis new refrigerated box: Alloga solar roof: Cold chain guaranteed for up to 30 Energy generation on 10,000m2 hours! 07.08.2018 − © Galenica Group 8
Slide 9: Products & Brands innovation
Products & Brands innovation New name – expanded product range 07.08.2018 − © Galenica Group 9
Slide 10: Efficiency: processes, IT, blistering capacity
Efficiency Processes – IT – blistering capacity Retail: − Process management Services: − Modulo − New blistering machines 07.08.2018 − © Galenica Group 10
Slide 11: Market environment
Market environment Authorities: measures and projects Reduction in drug prices 2018 2019 2020 Change of category of OTC products1 2019 LOA IV LOA V 2020 Price of generics Amendment of Health from 2020 …. Insurance Act (KVG) 1 Swissmedic categories C, D 07.08.2018 − © Galenica Group 11
Slide 12: Focus 2018/2019
Focus 2018/2019 1. Strengthening of 2. Expansion 3. Efficiency projects online platforms 07.08.2018 − © Galenica Group 12
Slide 13: Summary of 1st half year 2018 (CFO)
Summary of 1st half year 2018 “We keep the sales guidance at the lower end of the range of +2% to +3%. However, we expect an EBIT of at least at prior year level.” Felix Burkhard CFO 07.08.2018 − © Galenica Group 13
Slide 14: Swiss pharmaceutical market: stable growth
Swiss pharmaceutical market − stable growth (YTD June 2018) Value in Value in Market1 million CHF Share Change Market1 million CHF Share Change Total: 2,949.7 100% 1.4% Retail2: 2,233.6 100% 1.7% 3.6% 2.7% Hospitals: 716.1 24.3% -1.5% Rx3: 1,864.0 83.5% 2.7% 6.5% 3.0% 2.3% OTC4: 369.6 16.5% 0.6% Phy
Slide 15: Galenica Group: result and profitability improved
Galenica Group − result and profitability improved Net sales (in million CHF) EBIT adjusted1 (in million CHF) +7.5% +0.9% -2.3% 49.4% 49.3% 4.5% 4.5% 4.8% H1 2017 H1 2018 H1 2017 H1 2018 EBIT w/o one-off effects one-off effects EBIT margin (ROS)2 Highlights: 7.5% EBIT growth without one-off effect
Slide 16: Health & Beauty segment: EBIT margin increased
Health & Beauty segment − EBIT margin increased Net sales (in million CHF) EBIT (in million CHF) +2.5% +9.5% 49.2% 49.7% 6.7% 6.8% 7.3% H1 2017 H1 2018 H1 2017 H1 2018 EBIT margin (ROS) Highlights: Pleasing EBIT margin increase by 50 basis points up to 7.3% Solid sales growth despite price cuts
Slide 17: Health & Beauty segment: net sales
Health & Beauty segment − net sales Retail (in million CHF) Products & Brands (in million CHF) +2.6% +0.0% 48.9% 54.5% H1 2017 H1 2018 H1 2017 H1 2018 Highlights: 1% Retail sales growth thanks to the expansion of the pharmacy network Specialty pharmacy Mediservice (mail-order Rx) grew around 4%
Slide 18: Services segment: solid development
Services segment − solid development Net sales (in million CHF) EBIT (in million CHF) +2.8% +0.9% -22.1% 49.4% 49.9% 1.8% 1.9% 1.9% H1 2017 H1 2018 H1 2017 H1 2018 EBIT w/o one-off effects one-off effects EBIT margin (ROS)1 Highlights: EBIT margin stable at a high level of 1.9% Sales to self-dis
Slide 19: Stable financial and tax costs
Galenica Group − stable financial and tax costs Financial result (in million CHF) Tax rate 18.0% 18.0% 15.0% H1 2017 H1 2018 2017 H1 2017 H1 2018 Highlights: Like in H1 2017, tax rate includes positive one-off effects of around 1% (revision of taxation by tax authority) 07.08.2018 − © Galenica Gro
Slide 20: Robust net profit evolution
Galenica Group − robust net profit evolution Net profit (in million CHF) +8.2% -2.4% One-off effects Net profit adj. w/o one-off effect 49.0% IAS19 effect H1 2017 H1 2018 Highlights: Like-for-like net profit growth at +8.2% without one-off effects 07.08.2018 − © Galenica Group 20
Slide 21: Investments
Galenica Group − investments Investments in million CHF % of sales 1.8% 2.2% 1.4% Cash conversion1 70% 65% 77% Investments in intangible assets Investments in tangible assets H1 2017 H1 2018 Highlights: H1 2017 (FY 2017) without the acquisition of Merfen® and Vita-Merfen®: - Capex 1.2% (FY 2017: 1
Slide 22: Free Cash Flow
Galenica Group − Free Cash Flow Free Cash Flow (in million CHF) Divestment of assets and disposal of subsidiaries Cash flow from operating activities Investments in tangible, intangible and financial assets and associated companies Purchase of subsidiaries (net cash flow) H1 2017 H1 2018 Highlights:
Slide 23: Strong balance sheet
Galenica Group − strong balance sheet Net debt / Equity in million CHF Debt coverage1 1.6x 1.7x 1.9x 48% 46% 43% Equity Net debt 19% 17% 17% H1 2017 H1 2018 % of total liabilities and shareholders' equity Highlights: Net debt at 1,9 x EBITDA, even after dividend payment 2017 without dividend pay
Slide 24: Outlook 2018
Galenica Group − outlook 2018 Sales growth of +2% to +3% expected at the lower end of the range due to the higher than announced price cuts EBIT (excluding effects of IAS 19) at least at prior-year level thanks to improved profitability 2018 dividend at least at prior-year level 07.08.2018 − ©
Slide 25: Disclaimer
Disclaimer Certain statements, beliefs and opinions in this presentation are forward-looking, which reflect the Company’s or, as appropriate, the Company’s directors’ current expectations and projections about future events. By their nature, forward-looking statements involve a number of risks, unce