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2017-08-25 – BOULE DIAGNOSTICS (1) Copyright © 2013, Boule Medical AB
Boule Diagnostics AB
Company presentation and Q2 report August 25, 2017
Fredrik Dalborg, CEO and Group President
2017-08-25 – BOULE DIAGNOSTICS (2) Copyright © 2013, Boule Medical AB
Q2 2017 in summary
• Tender revenues are highly variable by quarter. In Q1 we had a 26% growth and wenow see a slower growth in Q2
– Instrument unit sales grew by 65% in Q1 and -4% in Q2. H1 growth 22%
– Revenues in line with recent quarters, but compared to the strong Q2 2016 growth is 2%
– Rolling 12 months revenue growth is 17%, and H1 growth 13%
• Profitability in the quarter is weak for three main reasons:
– Geography mix: Asia larger share, LATAM smaller share due to major tenders in 2016
– Business efficiency improvement actions: China manufacturing shutdown, elimination ofpositions in US, etc.
– One off items: Employee option program, final items CEO change, write down of accountsreceivables
• Other key events
– Won yet another tender in India, this time for 140 units intended for mobile use (delivery Q2)
– Instrument growth in Asia is now follwed by consumables growth (>50% growth in Q2)
– China manufacturing shutdown completed June 30
– CFO departing, process to find replacement has started
– Continuing the work to improve efficiency and support short and long term growth
2017-08-25 – BOULE DIAGNOSTICS (3) Copyright © 2013, Boule Medical AB
Following multiple high growth quarters, Q2 revenues
relatively stable with growth at 2%
• Growth for the first half of 2017 is 13%• Rolling 12 months growth is 17%
SEK millionGrowth vs. previous year
-5,0%
0,0%
5,0%
10,0%
15,0%
20,0%
25,0%
30,0%
35,0%
0
20
40
60
80
100
120
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Net revenue and growth
Net sales Growth
2017-08-25 – BOULE DIAGNOSTICS (4) Copyright © 2013, Boule Medical AB
Geographical mix is changing, impact on average selling
price and margin
Growth
4%
52%
50%
-73%
-5%
28%
SEK million
0,0
20,0
40,0
60,0
80,0
100,0
120,0
Q2 2016 Q2 2017
Net revenue by region
USA
Asia
East Europe
LATAM
West Europe
Africa/Middle East
• Asia (low price market) is growing rapidly
• Eastern Europe (highprice market) is growingrapidly
• LATAM (high pricemarket) has decreased, following a big tender in 2016
• Net effect is reducedaverage selling price for instruments
Instrument growth in Asia has been strong, and has been followed by strong reagent sales growth. Reagent sales in Asia grew by 53% in Q2 2017.
2017-08-25 – BOULE DIAGNOSTICS (5) Copyright © 2013, Boule Medical AB
Reasons for reduced gross margin
Reasons Approximateimpact
Comment
Geographical mix -2% • Asia larger share of business (strong growth, lower prices)• LATAM lower share of business (major tenders Q2 2016)
Product mix -1% • Higher share external distributed products• Increased share lower margin consumables categories
Low utilization China plant -1% • Low utilization of plant before closure had negative impact on gross margin
Other -1% • Currencies, manufacturing variances, etc.
Total -5%
2017-08-25 – BOULE DIAGNOSTICS (6) Copyright © 2013, Boule Medical AB
Non recurring restructuring and efficiency improvement
costs
Action Approximateimpact(MSEK)
Comment
China manufacturing shutdown 3 • Reduce operating expenses and improve gross margin• Reduce complexity and increase overall efficiency
Other efficiency improvementmeasures
1 • Effieciency improvements, elimination of redundant roles
Option programs and CEO changecosts
7 • Costs for employee option program• Final costs CEO change
Write down of accountsreceivables
1 • Write down of uncertain accounts receivable according to policy
Total 12
Adjusting for the non recurring restructuring and efficiency improvement costs, EBIT would have been MSEK 11.3 which corresponds to an EBIT-margin of 10.8%.
2017-08-25 – BOULE DIAGNOSTICS (7) Copyright © 2013, Boule Medical AB
High level overview of actions to improve gross margin
• China manufacturing shutdown, completed June 30. Will start to
generate savings Q3
• Process improvements in reagent and control manufacturing
• Implementing plans to drive more business in North America and
LATAM
• Assessing cost reductions in growth markets: Optimizing logistics,
distributor arrangements, etc
• Pricing review
2017-08-25 – BOULE DIAGNOSTICS (8) Copyright © 2013, Boule Medical AB
Net sales by region and product
Net sales by region
MSEK
Apr-Jun
2017
Apr-Jun
2016 Change
Jul 16-
Jun 17
(R12)
Jul 15-
Jun 16
(R12)
Change
(R12)
USA 32.6 31.3 4% 132.1 122.7 8%
Asia 30.8 20.3 52% 106.8 80.4 33%
Eastern Europe 16.7 11.2 50% 64.2 43.8 46%
Latin America 6.1 22.7 -73% 35.7 49.3 -28%
Western Europe 8.8 9.3 -5% 35.8 34.6 3%
Africa/Middle East 9.4 7.4 28% 50.7 32.6 56%
Total 104.3 102.0 2% 425.2 363.6 17%
Net sales by product
MSEK
Apr-Jun
2017
Apr-Jun
2016 Change
Jul 16-
Jun 17
(R12)
Jul 15-
Jun 16
(R12)
Change
(R12)
Instruments 36.3 40.6 -10% 164.4 136.0 21%
Consumables own instruments 40.8 37.6 9% 159.3 135.3 18%
Consumables OEM and CDS-Brand 17.5 15.1 16% 67.7 60.8 11%
Other 9.7 8.8 15% 33.8 31.5 13%
Total 104.3 102.0 2% 425.2 363.6 17%
2017-08-25 – BOULE DIAGNOSTICS (9) Copyright © 2013, Boule Medical AB
Key figures Apr-June 2017
Key figures
Apr-
Jun
2017
Apr-
Jun
2016 Change
Jul 16-
Jun 17
(R12)
Jul 15-
Jun 16
(R12) Change
Number of instruments sold 1 092 1 143 -4% 4,218 3 355 +26%
Net sales, SEK million 104.3 102.0 +2% 425.2 363.6 +17%
Gross margin, % 41.8 46.8 46.8 46.3
Operating profit/loss, SEK
million -0.7 12.6 -106% 37.3 25.3 +47%
Operating margin, % -0.7 12.3 8.8 6.9
Net debt, SEK million -71.4 -20.0 -71.4 -20.0
Return on equity, % -0.5 4.5 13.3 7.9
Net debt/EBIT (R12), times -1.9 -0.8 -1.9 -0.8
Earnings per share, after
dilution, SEK -0.24 1.89 -113% 5.35 3.77 +42%
10
20
30
40
50
60
260
300
340
380
420
460
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2014 2015 2016 2017
SEK millionSEK million
Net sales (R12) and EBIT (R12)
Net sales EBIT
2017-08-25 – BOULE DIAGNOSTICS (10) Copyright © 2013, Boule Medical AB
Shareholders 30 June 2017 (and thereafter known
changes)
Number of shares
Proportion of
capital/votes
Svolder AB 515,000 10.87%
AB Grenspecialisten 493,317 10.41%
Thomas Eklund incl. bolag 461,577 9.74%
Swedbank Robur Fonder AB 414,896 8.75%
SEB Asset Management 414,086 8.74%
Tredje AP-fonden 381,707 8.05%
Handelsbanken Fonder 286,098 6.04%
Linc Invest AB 265,291 5.60%
Humle Kapitalförvaltning 167,155 3.53%
Länsförsäkringar Småbolag Sverige 144,770 3.05%
Société Générale 129,548 2.73%
Other shareholders (1,616) 1,065,693 22.49%
Total number of shares 4,739,138 100.00%
Number of options outstanding 121,000
Total number of shares including options 4,860,138
2017-08-25 – BOULE DIAGNOSTICS (11) Copyright © 2013, Boule Medical AB
Number of instruments sold 2006 – Q2 2017*
*) Boule tied instruments.
**) The 2017 No of instruments sold per year are calculated as rolling 12 months.
3051280
26463956
5892
8473
11397
14422
17723
20498
2431926554
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
0
5 000
10 000
15 000
20 000
25 000
30 000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017(Q2)
No. of instruments sold per year **)
Accumulated No. of instruments sold
Accumulated No. of instruments sold No. of instruments sold per year
2017-08-25 – BOULE DIAGNOSTICS (12) Copyright © 2013, Boule Medical AB
Future challenges and opportunities for Boule
Diagnostics
Challenges Opportunities
• Fragmented market• Competitive pricing• Fast growing markets (Asia in
particular) have low price levels• Important to deliver relevant
product development to market• Instrument tenders play a big role in
sales growth, • quarter to quarter variability• Instruments reduce gross
margin• Falling USD exhange rate puts
pressure on revenues and profit
• Veterinary market• Improvements in manufacturing
efficiency and structure• Broadening portfolio through
agreements and/or acquisitions• More regional/local presence to
improve customer experience(service, product specialists, etc.)
• Launching new products based on reliable platforms
• Continued growth in emergingmarkets
• In developed markets focus on near-patient care to reduce healthcarecost
2017-08-25 – BOULE DIAGNOSTICS (13) Copyright © 2013, Boule Medical AB
Our priorities are clear
1. Support and strengthen revenue and profit growth momentum
(strengthen ability to drive sales in promising markets)
2. Improve current products and develop new products
3. Strengthen and extend product portfolio through distribution
agreements, supply agreements and potential acquisitions
In parallel we will continue our process efficiency programs and assess
how our manufacturing structure can be optimized, as well as maintaining
high levels of quality and regulatory compliance.
2017-08-25 – BOULE DIAGNOSTICS (14) Copyright © 2013, Boule Medical AB
Thank you!