At the end of June, the listed Reig Jofre reached 132 million euros in sales, 14% more than in the same period of the previous year. Added to the boost in demand for antibiotics manufactured at the Toledo plant is the start of industrial-scale manufacturing at the new Barcelona plant and strong growth in sales in Consumer Healthcare. EBITDA grew by 6%, reaching 14.2 million euros, which also represents a record result in a semester.
The Pharmaceutical Technologies division, dedicated to injectable products and antibiotics, is at the forefront of this growth, while the growth of the previous year in the Specialty Pharmacare division, focused on prescription medical products, moderates. Consumer Healthcare, the consumer products division continues to grow strongly, especially in the FORTÉ PHARMA brand in the French and Belgian markets.
Recovery of sales due to the increased demand for antibiotics both in Spain and internationally, as well as for other medicines for hospital use due to the recovery from surgical interventions. The new plant for injectable products in Barcelona has begun to manufacture its own products according to the plan prior to the pandemic, which will be reflected in the income for the second half of the year. The plant will reach its full production capacity between 2024 and 2025.
After closing a year 2021 in which the recovery of the sale of medical prescription products was achieved, growing by 14%, this division maintains positive growth. This trend may improve thanks to the growth in European countries where their own medical visit networks are being strengthened, and especially in Poland, a subsidiary created in 2021.
Also in the second semester, the first impacts of the launch of new products in the dermatological area in Spain will be produced.
After a good year 2021, with an 8% growth in revenues in this division, the first half of 2022 presents a remarkable +18% increase in sales. The increase comes both from the FORTÉ PHARMA brand, with its range of food supplements, and from the recovery in Spain of OTC products in the area of respiratory and ear care, which had fallen the previous year due to the lower incidence of infections. during the pandemic due to distancing measures.
The weight of international business grows in 2022. Reig Jofre obtains 57% of revenues from international markets (55% in 2021), which as a whole have grown by 21%. The demand for antibiotics is recovering, the basis for the growth of the Pharmaceutical Technologies division, which obtains 65% of its revenues outside of Spain, thanks to the recognition of REIG JOFRE as a global benchmark manufacturer of injectables and antibiotics.
Sales by Geographic Area
Spain represents 43% of the group’s sales, growing 6% in income, growth focused on the Pharmaceutical Technologies and Consumer Healthcare divisions.
The rest of the European markets, which represent 46% of sales, have grown by 30%. The main engine of growth is once again the hospital products area of Pharmaceutical Technologies. Also in Consumer Healthcare, the FORTÉ PHARMA brand grows in France, Belgium and Spain, and the new subsidiary in Poland joins this division.
The rest of the countries, which as a whole represent 11% of sales, fell by 6%, a trend that we expect to reverse in the second half of the year.
New plant for injectable products in Barcelona
Manufacture of the first product batches in the first half of 2022
The first industrial batches of Reig Jofre injectable products were manufactured during the second quarter of the year. The impact on income of the new facility, which will triple the manufacturing capacity of injectable products, will occur in the second half of the year, and it is expected to gradually reach maximum production capacity between 2024 and 2025. The factory will be dedicated to both to already consolidated products as well as to new own and third-party developments, and the technological capacities in the area of biological-based medicines will be exploited.
Once the agreement for the technology transfer and manufacturing of the COVID-19 vaccine is finalized, the capacity of the new plant is released for other ongoing projects.
The semi-annual closing of sales, 14% above the previous year, is largely due to the recovery in the sale of antibiotics, one of the ranges with the tightest margin in our Pharma Tech product portfolio.
This, together with the pressure on the prices of materials, and the higher consumption of raw materials entailed by the start of manufacturing at the new Barcelona plant, places the gross margin at 59% of sales (62% in 2021).
Expenses for employee benefits and other operating expenses taken as a whole grew by 7%, thus offsetting the reduction in gross margin.
On the one hand, personnel expenses grew mainly due to the higher level of industrial activity and the growth of the commercial network in Consumer Healthcare; on the other, other operating expenses grew by 5%, well below the growth in sales.
EBITDA reaches 14.2 million euros, growing 6% compared to the same period in 2021.
Depreciation of fixed assets amounts to 9.4 million euros, which represents an 8% growth compared to 2021. This increase is due both to industrial investments in technology and increased capacity and to the depreciation of intangible assets, including R&D projects that have already been completed.
In this first half of 2022, a higher financial expense was recorded than the previous year, due to the greater indebtedness associated with investments, and to a greater impact of exchange rates.
The result before taxes reaches 4.2 million euros, 2% above the same period of 2021.
Specialty Pharmacare and Consumer Healthcare will continue to reinforce growth strategies with special emphasis on international expansion.
Investments and Financing
With the investment in the Barcelona plant completed, this year’s main project is the construction and start-up of a new production line at the plant in Sweden, dedicated to the development and manufacture of the group’s dermatological products.
Excluding the effect of IFRS 16, the Financial Debt with banks and other public bodies is already slightly reduced and stands at 62.3 million euros, thus initiating a change in trend compared to previous closings.
The Debt/EBITDA ratio remains at 2.5, the same level at the end of 2021.
After a year 2021 marked by the fall in demand in some of Reig Jofre’s main product ranges and the investment for the start-up of the new plant in Barcelona, in 2022 it resumes its strategic growth plan, in which the demand for hospital products is clearly recovering and in which the new plant has already started manufacturing its products.
Reig Jofre expects to close a 2022 financial year at the current rates of growth in Sales and EBITDA. The consolidation of the recovery in demand, the new launches and the progressive use of the new manufacturing capacity available will be the keys to growth in sales and results in 2022.
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