Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sequent Scientific Ltd (BOM:512529, Financial) reported a consolidated revenue growth of 6.6% for Q2 FY25 and 11.7% for the first half of the year, indicating strong performance.
- The company's EBITDA showed significant improvement, with a 70% increase in Q2 and a 161% increase in H1 year-on-year.
- The merger with Viash Life Sciences is expected to have a transformative impact, increasing R&D strength sixfold and capacity fivefold.
- The formulation business experienced double-digit growth, with strong performance in Europe and emerging markets.
- The company has received EU GMP certification for its manufacturing facility in Turkey, enhancing export capabilities.
Negative Points
- API revenues for the quarter were below plan due to postponed shipments, impacting the overall financial performance.
- There is a modest increase in working capital, reflecting strategic decisions to support growth in Turkey and Spain, which could strain resources.
- The company incurred a cost of INR43.2 million related to the merger process, impacting financials as an exceptional item.
- Despite improvements in EBITDA, profit after tax remains low, indicating challenges in translating operational gains to net profit.
- The company faces ongoing geopolitical and macroeconomic risks, which could impact future performance.
Q & A Highlights
Q: Will Sequent Scientific Ltd be undertaking any acquisitions in the future, and what are the plans for reducing debt and finance costs?
A: Unidentified_3 (MD and Co): We are open to acquisitions that fit our growth areas, particularly in animal health and companion animals. Regarding debt reduction, our debt-to-EBITDA ratio is improving, and we expect it to continue decreasing as we manage working capital and business expansion. Unidentified_4 (CFO): Our debt-to-EBITDA ratio has improved from 3.55x to 2.30x, and on a combined basis with VR, it is below 1.50x, indicating a comfortable position.
Q: Is there any seasonality in the formulation numbers, and what is driving growth in the Indian formulation business?
A: Unidentified_3 (MD and Co): There is some seasonality in specific markets, but overall, the growth is consistent. The Indian formulation growth is driven by aggressive promotions and three new products launched last year, with the full impact of new personnel expected by Q4.
Q: What are the expected synergies from the merger with Viash Life Sciences, and how will it impact the CDMO business?
A: Unidentified_5 (CEO of Viash): We are working on synergies in R&D, manufacturing, sales, and indirect costs. The merger will enhance our CDMO capabilities, and we are already seeing opportunities in this area, with some projects underway.
Q: Can you provide more details about Viash Life Sciences' business segments and market presence?
A: Unidentified_5 (CEO of Viash): Viash operates a large portfolio of 60 commercial products across 150 countries, with a strong presence in regulated markets like Europe and China. Our focus is on complex and innovative products, with a significant portion of our portfolio in oncology.
Q: What is the status of the US Biosecure Act, and how might it impact business opportunities?
A: Unidentified_5 (CEO of Viash): The act is still pending approval, but there is a positive trend of business moving to India. We expect opportunities to increase once the act is approved, but business is already shifting in anticipation.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
