Euroapi (EAPI) H1 2024 earnings summary

Executive summary

• Net sales declined 9.6% year-over-year to €448.7 million, mainly due to lower Sanofi volumes and the Brindisi suspension, but commercial activity with non-Sanofi clients remained solid and new contracts supported long-term growth.

• FOCUS-27 transformation plan execution is on track, with key initiatives launched, operational and organizational changes underway, and financing discussions in advanced stages.

• Portfolio optimization and headcount reduction measures were implemented, including discontinuation of 13 APIs, ramp-down of workshops, and a well-advanced Haverhill divestment process targeting completion in 2025.

• Financial discipline improved through controlled CAPEX, reduced inventories, and better cash management, resulting in positive free cash flow before financing of €10 million.

• Organization adapting through management team enhancements; commercial activity remains solid, with new contracts and customer growth.

Financial highlights

• H1 2024 net sales were €448.7 million, down 9.6% year-over-year; Sanofi sales fell 14.9%, other clients down 4.6%.

• Core EBITDA was €47.6 million (margin 10.6%), down from €62.5 million (12.6%) in H1 2023; EBITDA was -€1.4 million, impacted by €47.2 million in exceptional costs related to FOCUS-27.

• Net income was a loss of €34.8 million, compared to a profit of €62.8 million in H1 2023; basic EPS at (€0.37) vs. €0.67.

• Gross profit was €98 million, with gross margin up to 21.8% from 19.5% year-over-year.

• Free cash flow before financing activities was €10 million, a significant improvement from -€111.2 million in June 2023.

Outlook and guidance

• Full-year 2024 guidance confirmed: net sales expected to decrease 8–11% year-over-year; H2 performance to slightly exceed H1 due to CDMO phasing.

• Core EBITDA margin for 2024 expected between 4% and 7%, with profitability impacted by transformation and restructuring costs.

• Brindisi site to gradually resume production and shipments in Q3 2024.

• FOCUS-27 plan aims for €75–80 million annual run-rate incremental Core EBITDA by end-2027.

• Working capital improvement anticipated, mainly from inventory reduction in H2.