Siegfried Holding Ag · SIX:SFZN
Siegfried — FY2018 Earnings Presentation
30 slides from Siegfried's earnings presentation, Mar 7, 2019
Slide 1: Building a leading fully integrated CDMO player
Building a leading fully integrated CDMO player Media and Analyst Conference 2019 Zurich – 7 March 2019
Slide 2: Safe harbor statement
Safe harbor statement This document is solely for use in connection with the presentation held by Siegfried Holding AG. It is furnished to you solely for your information and you may not reproduce it or redistribute to any other person. The contents of this document are to be kept strictly confident
Slide 3: Agenda
Agenda Status & Outlook Facts & Figures Strategy Media & Analyst Conference – 7 March 2019 3
Slide 4: Higher sales and significantly higher profits in 2018 – positive outlook for 2019 and beyond
Higher sales and significantly higher profits in 2018 – positive outlook for 2019 and beyond › Robust growth: Net sales up to CHF 794.3m (+5.8%) › Increased profits and profitabilities on all levels: EBITDA CHF 127.4m (+14.5%) and EBITDA margin 16.0% (+1.2 percentage points), net profit CHF 57.5m (+
Slide 5: Agenda
Agenda Status & Outlook Facts & Figures Strategy Media & Analyst Conference – 7 March 2019 5
Slide 6: Robust growth in net sales
Robust growth in net sales CHF million 2018 2017 Change Drug Substances 595.5 580.7 + 2.5% Drug Products 198.8 169.8 + 17.1% Total 794.3 750.5 + 5.8% (+ 4.4% in LC1) Net sales split 2018 › Net sales grew by +5.8% to CHF 794.3m 25% › Drug Products recorded a growth of +17.1%, Drug Substances a growth
Slide 7: Highly diversified business portfolio with low dependency on a single customer or product
Highly diversified business portfolio with low dependency on a single customer or a single product Net sales: Customer concentration 2018 Net sales: Product concentration 2018 100% 100% 62% 65% 3% 3% 2% 2% 3% 2% 3% 3% 3% 2% 3% 3% 4% 3% 4% 3% 6% 5% 6% 7% Other Other Total Total A B C D E F G H I J AA
Slide 8: Significant increase in operating profits
Significant increase in operating profits CHF million 160 156.5 138.8 127.4 120 111.3 77.8 80 61.9 57.5 40.8 40 0 Gross profit EBITDA1 EBIT1 Net profit1 2017 2018 › Significant increase of profits on all levels, gross profit through net profit › Strong increase of net profit by CHF 16.7m (+40.9%) ›
Slide 9: Margin expansion on all levels – EBITDA margin increase
Margin expansion on all levels – EBITDA margin increase of 120 basis points 19.7% 20% 18.5% 16.0% 14.8% 15% 9.8% 10% 8.3% 7.2% 5.4% 5% 0% Gross profit EBITDA1 EBIT1 Net profit1 2017 2018 1. Numbers for 2017 are restated; numbers for 2018 before restructuring charge Media & Analyst Conference – 7 Mar
Slide 10: Strong increase of net profit by CHF 15.5m to CHF 56.3m
Strong increase of net profit by CHF 15.5m to CHF 56.3m CHF ‘000 2018 2017* Net sales 794 297 750 468 Cost of goods sold – 637 769 – 611 657 Gross profit 156 528 138 811 Marketing and sales – 16 122 – 16 228 Research and development – 27 471 – 25 631 Admin and general overhead – 43 350 – 41 290 Othe
Slide 11: Significant improvement of operating cash flow by CHF 21m to CHF 106m
Significant improvement of operating cash flow by CHF 21m to CHF 106m CHF ‘000 2018 2017 Operating cash flow before changes in NWC 134 949 106 565 Change in NWC – 28 948 – 21 933 Operating cash flow 106 001 84 632 Purchase of PPE and intangibles (net) – 60 053 – 52 840 Acquisition of group companies
Slide 12: Siegfried's use of funds follows a clear set of priorities
Siegfried’s use of funds follows a clear set of priorities in order to provide for sufficient sources of funds for strategy execution 1 2 3 4 Re-invest for organic M&A in line with Dividend policy De-leverage growth strategy “Evolve” › Maintenance CapEx › Moderate pay-out ratio › Syndicated loan fac
Slide 13: Financing capacity: Sufficient dry powder to fund our strategic journey ahead
Financing capacity: Sufficient dry powder to fund our strategic journey ahead 2017 2018 Net debt / Net debt / 0.6 0.38 0.6 0.18 EBITDA1 EBITDA1 80 80 CHF CHF million million 70.1 65.9 60 60 22.2 43.7 46.8 40 40 23.3 20 20 0 0 Net debt Treasury Net debt after Net debt Treasury Net debt after shares t
Slide 14: Pay-out proposal to the AGM on 17 April 2019: increase to CHF 2.60 per share
Pay-out proposal to the AGM on 17 April 2019: Increase by 20 cent to CHF 2.60 per share › The Board of Directors proposes a pay-out from the capital contribution reserves of CHF 2.60 per share (2018: CHF 2.40 per share) – in total approx. CHF 10.8m › The capital contribution reserve after distributi
Slide 15: Agenda
Agenda Status & Outlook Facts & Figures Strategy Media & Analyst Conference – 7 March 2019 15
Slide 16: Siegfried's mission: What we do – and how we do it – matters
Siegfried’s mission: What we do – and how we do it – matters to customers, patients, and society With mastery of science and technology, we take the precious innovations of our pharmaceutical customers to industrial scale and manufacture safe drugs for patients worldwide Media & Analyst Conference –
Slide 17: Siegfried does matter to customers, patients and society
Siegfried does matter to customers, patients and society – every day, everywhere Siegfried API › Approx. 1,500 active pharmaceutical ingredients (APIs) are portfolio 200 contained in pharma products approved by the FDA 1,300 › Thereof Siegfried supplies approx. 200 APIs – acting as a Others signific
Slide 18: Siegfried is playing in an attractive and growing market
Siegfried is playing in an attractive and growing market › Healthcare expenditure with strong growth across all segments including pharma › Outsourcing of manufacturing is an ongoing and sustainable development due to strong strategic rationale for pharmacos › The CDMO market is growing at approx. 6
Slide 19: The CDMO market is growing above rates of pharma's prescription segment
The CDMO market is growing above rates of pharma’s prescription segment Global prescription pharma market vs CDMO market Key facts Global market revenue in USDb Market growth forecasts 1,200 › Worldwide prescription pharma market is +4.5% growing at approx. 4.5% (CAGR 2014- 1,070 2022) 1,000 › World
Slide 20: The pharmaceutical industry is changing: future customer demands and industry dynamics
The pharmaceutical industry is changing: Future customer demands and industry dynamics shaping the CDMO industry Five fundamental trends of the pharmaceutical industry impacting CDMOs › Focus on innovation and marketing, not (or increasingly less) on in-house process development and production › Inc
Slide 21: Our production network offers a unique combination of flexibility and integration
Our production network offers a unique combination of flexibility and integration for both, innovative and generic products Media & Analyst Conference – 7 March 2019 21
Slide 22: Drug substances: highly competitive and increasingly integrated network of sites
Drug substances: We run a highly competitive and increasingly integrated network of sites to best address customer needs New Process research & Large-scale manufacturing network business development centers supported by local process excellence groups Focus on launch Focus on run & deliver of new pr
Slide 23: Based on our network of differentiated sites, we can access more than one market entry point
Based on our network of differentiated sites, we can access more than only one market entry point Sales Price erosion – cost efficiency Flexible capacity, high technical Generics requirements Originator ~ 9 years 5–15 years > 10 years Clinical Pre-clinical On-patent Off-patent phase 1–3 Siegfried si
Slide 24: Addressing both innovative and generic segments reduces the volatility of our business
Being able to address both, the innovative and generic segment reduces the volatility of our business Number of FDA approvals for Number of ANDA Reduced volatility: innovative drugs “1st generic approval” Number of NDA + ANDA Standard deviation in % Standard deviation in % Standard deviation in % #
Slide 25: The CDMO competitive landscape is highly fragmented
The CDMO competitive landscape is highly fragmented – Siegfried with a leading position, however, room to advance further Global 2017 market revenue Competitive landscape by company in USDm 69,716 70,000 › Despite ongoing consolidation, the CDMO 65,000 market remains very fragmented › The top ten pl
Slide 26: Siegfried strives for expansion of its leading position in a fragmented environment
Siegfried strives for expansion of its leading position in a highly fragmented competitive environment Sales USD Role in the consolidation game > 1b Breakaway Group 1b Chasing Pack 500m Peloton 250m 100m … any at all? Source: Kurmann Partners, Siegfried Media & Analyst Conference – 7 March 2019 26
Slide 27: Size matters: large and growing players translate scale into superior profitability
Size matters: Large and growing players are able to translate scale into superior profitability levels EBITDA margin (%) Economies of scale 40 › Larger players have higher 35 EBITDA margins 30 › Growth often translates into increasing EBITDA margins 25 › CDMO business model offers 20 significant eco
Slide 28: Strategy EVOLVE: drive organic and external growth agenda
Strategy EVOLVE: Drive Siegfried’s organic and external growth agenda by executing on a set of independent strategic options Investments in › Grow our technology base in small molecule manufacturing technology base (e.g., micronization, HPAPI) Organic › Organic expansion in adjacent areas: aseptic f
Slide 29: Siegfried's vision: perpetuate robust organic growth and execute value accretive M&A
Siegfried’s vision: Perpetuate robust organic growth and execute value accretive M&A to outgrow market and competition Siegfried today Siegfried vision Accelerated growth through M&A › Value accretive acquisitions in Be a global leader in the CDMO space our core areas › Acquisitive entry to new ar
Slide 30: Siegfried i
Siegfried i expect more