Release Date: February 25, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Laboratorios Farmaceuticos Rovi SA (WBO:ROVI, Financial) reported a 2% increase in sales of its specialty pharmaceutical business, reaching €427.5 million in 2024.
- The company's gross margin improved by 370 basis points in 2024, indicating better cost management and profitability.
- Sales of the product Odi doubled in 2024 compared to 2023, showcasing strong market acceptance and growth potential.
- Rovi's ESG risk rating improved, placing it 5th among 424 companies in the pharmaceutical industry, highlighting its commitment to sustainability.
- The company has entered into a new agreement to support the manufacture of prefilled syringes, expected to positively impact revenues by 20-45% over 2023 sales starting in 2027.
Negative Points
- Total operating revenues fell by 7.9% to €763.7 million in 2024, primarily due to decreased revenues from COVID-19 vaccine manufacturing.
- Net profit decreased by 20% to €134.6 million in 2024 compared to 2023, reflecting financial challenges.
- The CDMO business experienced a significant decline in sales, attributed to lower revenues from COVID-19 vaccine production and a provision impacting sales figures.
- R&D expenses increased by 3% to €25.8 million in 2024, indicating higher costs associated with ongoing clinical trials.
- The company expects operating revenue to decrease by a mid-single-digit percentage in 2025, suggesting continued financial pressure.
Q & A Highlights
Q: Could you tell me about the nature of the miss in EBITDA in Q4? Were there additional costs or provisions that put pressure on the 2024 EBITDA, and how much did the strategic review project cost?
A: The EBITDA levels were lower than market consensus, approximately 15% lower, mainly due to less than expected invoicing in the contract manufacturing business and a provision impacting sales figures. Additionally, non-recurring elements related to the strategic evaluation of the contract manufacturing business cost around €4.3 million, and the dismantling of a sodium heparin facility resulted in a write-off of around €4 million.
Q: What are your growth prospects for heparins for 2025?
A: We expect flat or slightly decreased sales for heparins. However, we see good momentum from international sales, particularly from China, Greece, and Turkey, which should contribute to growth in 2025.
Q: How much could the ex-Moderna business grow this year?
A: The ex-Moderna business in the CMO franchise grew at double digits in 2024. However, due to temporary shutdowns for upgrades, we expect Moderna sales in the CMO franchise to slightly decrease in 2025.
Q: If one of the reasons for lower sales in Q4 is a provision that is no longer present in 2025, why do you maintain the guidance in sales instead of increasing it?
A: The guidance for 2025 remains unchanged as it aligns with our current forecast. We expect a mid-single-digit decrease in operating revenue, consistent with our previous guidance.
Q: Do you expect further investment in projects like the Teraron project in the future?
A: The Teraron project is an interesting venture into advanced therapy and personalized medicine. We are assessing various projects but do not expect additional milestone payments in 2025. Future investments will depend on project quality and requirements.
Q: How do you expect SG&A and R&D to grow in 2025?
A: We anticipate a mid-single-digit growth in SG&A due to increased staffing needs in the CDMO business and ongoing projects. R&D expenses will depend on the progress of clinical trials and discussions with the FDA, with more visibility expected during the capital market day.
Q: Could you clarify how you expect production to ramp up for the CDMO contract, with full-year impact expected in 2027?
A: We anticipate routine manufacturing to begin either mid-2026 or early 2027, depending on the speed of tech transfer and regulatory approvals. The full-year impact is expected in 2027.
Q: Could you elaborate on the strategic fit of the AI diagnostic company acquisition?
A: The AI diagnostic company fits well with our hospital product portfolio, enhancing digitalization in pathology departments. It offers faster, more reliable diagnostics, aligning with our strategy and providing potential revenue streams as we expand in Europe.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
