(News Bulletin 247) – The world leader in active pharmaceutical ingredients launched a major profit warning on Monday evening. Euroapi is also shelving its medium-term objectives for the period 2023-2026.

Profit warning season is in full swing. After Alstom last Thursday and Maisons du Monde Monday evening, Euroapi is added to the list. The world leader in active pharmaceutical ingredients announced Monday evening after the market to revise downwards several of its objectives for 2023.

The disappointment is all the greater since the Euroapi group had regained favor with investors at the beginning of August after the announcement of half-yearly accounts which contained no false notes.

This Tuesday, after having been reserved for a long time, the action collapsed by 60% to 4.70 euros around 9:40 a.m.

2023 growth lower than expected by Euroapi

Several headwinds have in fact come across Euroapi’s path, thereby thwarting the French group’s financial objectives for the current year.

For the 2023 financial year, Euroapi is now targeting revenue growth which should be between +3% and +5%. Euroapi puts forward two elements which explain this slowdown anticipated by the company.

The former Sanofi subsidiary indicates that it has implemented a price optimization strategy for its API Solutions activity which corresponds to the active pharmaceutical ingredients “from its sales activity to third parties, for which the intellectual property is held by the group or licensed by the group and/or covered by a distribution contract”. But the plan defined by the French group was recently undermined due to pressure on prices which resulted, according to the group, from “lower inflation and from inventory reduction programs at certain customers”.

Secondly, the group’s sales of the CDMO activity (“Contract development and manufacturing organization”), i.e. the production of active ingredients for which the group does not own the intellectual property, should progress at a lower rate. than expected in the fourth quarter. “This situation results in particular from delays or pauses of projects, or reduced project sizes due to financing problems of biotechnology companies,” explains Euroapi.

Profitability will also be lower than expected. The core Ebitda margin (earnings before interest, taxes, depreciation and amortization) should now be between 9% and 11%

The drop in this indicator is mainly linked, according to Euroapi, to lower sales volumes leading to less favorable absorption of fixed costs than initially expected. The company also mentions an unfavorable margin mix for the rest of the year, linked to the slowdown in CDMO activity.

The previous roadmap delivered by Euroapi in March and which had been confirmed in August had already not convinced. Euroapi was still targeting revenue growth of “between +7% and +8%” (compared to 8.5% in 2022), a core Ebitda margin of between 12 and 14% (compared to 12.3% in 2022). ). Only investment objectives escape this transition from accounts to steel wool, Euroapi still intends to devote an envelope of between 120 and 130 million euros.

Suspension of 2023-2026 objectives

This update contains another disappointment. Euroapi is also suspending its 2023-2026 medium-term outlook as communicated in March 2023.

The company expected to achieve growth in its turnover of between 7% and 8% on average between 2023 and 2026, as well as a core Ebitda margin greater than 20% in 2026.

In its press release, Euroapi indicated that it would initiate a strategic review with a view to “adapting its operational model”. The group specifies that it will provide further information on the conclusions of this strategic review no later than February 29, 2024, on the occasion of the publication of the results for the year 2023.

This is therefore a new disappointment on the Euroapi file, a little less than a year after its first warning as a listed company, on its 2022 results. The former Sanofi subsidiary had been forced to lower its financial objectives due to the suspension of part of its production at its site in Budapest, Hungary. Production has since gradually resumed.