Biotage AB (publ) Year end Report January - December 2022

2023-02-15 08:00:00

A record year, but weaker fourth quarter

October – December

  • Net sales amounted to SEK 384 (41) million, an increase of 12.6 percent and an organic* decrease of 0.8 percent.
  • Operating profit amounted to SEK 41 (61) million and adjusted* to SEK 61 (70) million.
  • The operating margin was 10.8 percent (18.0) and adjusted to 15.9 percent (20.7).
  • EBITA* amounted to SEK 49 (67) million, and adjusted to SEK 69 (76) million.
  • The EBITA margin* amounted to 12.7 percent (19.5) and adjusted to 17.9 percent (22.2).
  • Profit after tax amounted to SEK 74 (46) million.
  • Earnings per share were SEK 1.12 (0.69) before and SEK 1.11 (0.69) after dilution.
  • Cash flow from operating activities decreased to SEK 99 (104) million.
  • Net cash* as of December 31 was SEK 199 (61) million.

January – December

  • Net sales amounted to SEK 1,566 (1,232) million, an increase of 27.1 percent and an organic* increase of 11.4 percent.
  • Operating profit amounted to SEK 327 (271) million and adjusted* to SEK 362 (283) million.
  • The operating margin was 20.9 percent (22.0) and adjusted to 23.1 percent (23.0).
  • EBITA* amounted to SEK 356 (284) million, and adjusted to SEK 391 (296) million.
  • The EBITA margin* amounted to 22.7 percent (23.1) and adjusted to 25.0 percent (24.0).
  • Profit after tax amounted to SEK 268 (205) million.
  • Earnings per share were SEK 4.06 (3.13) before and SEK 4.04 (3.13) after dilution.
  • Cash flow from operating activities decreased to SEK 341 (353) million.
  • On March 14, the Board decided on new financial goals: 12 percent organic growth and a 25 percent EBITA margin, both averaging over three years.
  • A dividend of SEK 1.55 per share was paid for a total amount of SEK 102 million in May.
  • The Board of Directors intends to propose to the Annual General Meeting a dividend to the shareholders for 2022 of SEK 1.60 (1.55) per share, corresponding to 39 percent of the result after tax.

Significant events after the end of the reporting period

  • On February 15, 2023 an agreement was announced to acquire Astrea Bioseparations.

Message from the CEO
After eight straight quarters of double-digit organic growth figures, we confirmed that we did not grow organically compared with the corresponding quarter in 2021. Despite this, 2022 was Biotage's best year ever.

In terms of results, the fourth quarter generally tends to be weaker for Biotage. 2022 was no exception, with an adjusted EBITA margin of 17.9% (22.2). The product range, price increases and ongoing challenges in the supply chain affected our margins. Biotage has implemented incremental price increases for customers, but in some cases the price increases in the supply chain have been so dramatic that a gap arose between our own price adjustments.

Even though the end of the year was less satisfactory than we would have wanted, I can still say that 2022 was the best year in our 25-year history. Biotage grew rapidly, with profitability and strong cash flow. During the year, we recorded several records: net sales of more than SEK 400 million in a quarter and an operating profit of more than SEK 300 million for the year. For the full year, our net sales amounted to SEK 1,566 million.

The weakened sales for the fourth quarter are due to two reasons. As expected, the production of mRNA vaccines for COVID-19 decreased significantly, which affected our business with Scale Up solutions for lipid purification in Europe. At the same time, there was a slowdown with our largest CRO customer in China.

Our global presence and broad and diversified product portfolio are strengths that enable us to balance different geographical markets and product areas. Now that China’s COVID-19 lockdowns have ended, our local organization has better long-term conditions to reach out to both new and existing customers. The fourth quarter was a new record quarter in the Americas and APAC also performed positively, with India, Japan and Korea showing organic growth.

Success in the US market was partly driven by continued strong sales in White Tech for the Biologics & Advanced Therapeutics product area, including our automated plasmid purification system Biotage® PhyPrep. Globally, sales in this product area grew by 50.1%. Sales in the Analytical Testing product area, within Red Tech, which includes our newly launched Biotage® Extrahera HV system, grew globally by 22.5%. The Water & Environmental Testing product area, in Blue&Green Tech, also grew globally during the quarter by 35.4% – the highest reported sales ever.

Another positive development during the year is how our manufacturing unit in Cardiff, Wales, has now achieved the objectives of a project to optimize production processes and further reduce solvent use there by up to 40%. During the year, a sustainability goal was achieved, where out team in Cardiff succeeded in updating existing production processes with new infrastructure that enables both increased capacity and a lower environmental footprint. We continue to strive to reduce the environmental impact of our manufacturing processes.

In an increasingly connected world, it is only natural that Biotage also provides innovative digitization solutions. Together with our customers, we have been working for some time on the development of remote control of, among other things, our purification systems Biotage® Selekt. We plan to make these solutions commercially available later in the year, something I am very much looking forward to. Not least as a sign that we listen to our customers, but also as an expression of innovation.

Today, we have been able to release the news with great joy that we will now further strengthen our product range by joining forces with a successful organization in chromatography for large molecules. This is a desirable and natural expansion of our already world-leading position in small molecule chromatography. The acquisition of Astrea Bioseparations Ltd includes a competent and experienced team at the same time that through the deal Biotage gets a new long-term and active owner. From a product perspective, both columns and media are added which will significantly strengthen our recurring revenue within the attractive market for biopharmaceuticals and advanced therapies. Over time, this will contribute to higher profit margins.

To sum up, we are now putting a fantastic but also challenging year behind us. Our growth and positive results have contributed to opportunities to invest in new, complementary businesses in attractive niches, which in turn equips us for continued growth and even better results. Most importantly, it allows us to contribute even more to solving important challenges for society. None of this would have been possible without all the fantastic employees at Biotage, who put their heart and soul into achieving our goals every day. I would like to take this opportunity to thank them, as well as our customers and shareholders, who put their trust in us. We look forward to continued positive development together in 2023!

Uppsala, February 15, 2023

Tomas Blomquist
President and CEO