Half Year 2025 Hikma Pharmaceuticals PLC Earnings Call - Pre Recorded

<unk> CEO of <unk> and I'm joined here by <unk> our CFO.

Let me start by saying how pleased I am with the progress we've made in the first half of the year.

Delivered strong revenue growth and build solid momentum across the business.

While operating profit was down against a strong comparator demand remains robust across our portfolio and we successfully launched new products that are already contributing to our growth.

We also made significant strides in strengthening our pipeline enhancing our manufacturing capabilities. This.

This is not just about today's performance, but about building for the future.

We've signed new strategic partnerships that will further expand our reach and capabilities and we've done all this while maintaining healthy profitability demonstrating.

And the agility of our business.

We're executing against our strategic priorities and this is clearly paying off we are well positioned for an excellent second half and we remain firmly on track to meet our full year guidance.

I'll go into more details by business segment later in the presentation, but first I'll hand over to <unk>, who will walk you through the financials.

So the hub and Hello, everyone.

Reflecting on Hikma is 2020 plus performance so far we delivered results in line with expectations for the first half.

We grew revenue, 6% driven by robust volumes across all business segments and regions with recent launches and the benefit of that now fully integrated Zillow acquisition, all contributing to growth.

Group core operating profit declined by 7% in the first half of 2000 $25 million to $373 million due to a combination of regional and product mix FX headwinds and the unusually strong etch one waiting of the branded in other businesses in 2024.

We maintain our expectation of overall growth in core operating profit for the full year.

These impacts are reflected in our 5% year on year decline in EBITDA and 5% year on year decline in core basic earnings per share for the first half of 2025.

It's 120 25 operating cash flow came at $161 million versus $198 million in the 2020 for comparison period, partly due to the decline in operating profit, but primarily driven by the timing of tax payments.

Okay.

Now taking a closer look at the segmental performance in the first half starting with Injectables.

We continue to see consistent and strong momentum on the top line with 12% core revenue growth year on year benefiting from recent launches and the acquisition.

In September 2024.

We are delivering strong growth in our European businesses with revenue growing at 26% and 16%.

In Europe, we benefited from an expanding portfolio of market shortages dynamic, while mena benefited from increasing demand in our existing portfolio.

Core operating profit was down 7% and core operating margin was 30% compared with 36, 3% in <unk> 2024.

The decline was due to change in product and geographic mix as well as an increase in costs related to the appreciation of the U S.

It is important to remember that even at 30%. These are industry, leading margins supported by the breadth of our portfolio frequency of launches and our focus on efficiency cost and quality.

We're pleased to see the products acquired in Brasilia acquisition contributing to revenue.

But at a lower margin in the short term, while we complete our Bedford.

To bring the manufacturing of this product in house.

We remain excited for the full year Injectables performance as we expect new launches to provide a tailwind in the second half.

In addition to the natural etch to weighting of our higher margin CMO operations.

Turning to branded the.

Our business continues to deliver throughout the month with.

With 4% growth on the top line and 3% operating profit growth with each one operating margin of around 50%.

We saw a slight contraction in gross margin.

Sent to 53%, reflecting the significant each one waiting of higher margin oncology tenders and etch one 2024.

Okay.

Our strategy of focusing on high chronic medications continued to delivered nicely aligning with the regional trends for increasing demand for these treatments.

Overall, we remain our second largest pharmaceutical company by sales up from fourth in 2021.

We continue to pursue portfolio expansion within branded with 14 product launches.

Is it because of regulatory filings in the first half of 2025.

Now looking at our Hikma Rx business, formerly known as genetics.

Our strategy in this business is to operate more within the differentiated and complex prescription medication space, enabling us to achieve greater returns.

We have seen a solid book across.

Across the Hikma export folio on each one with good growth from inhalation product and encouraging volumes across the business.

Due to the usual competitive dynamics in this business, we saw expected levels of price erosion in the mid to high single digits, which combined with 2020 fours <unk>.

Leasing resulted in an 11 month year on year contraction in gross profit.

Flowing through to our core operating profit.

We were successful in offsetting a meaningful increase in our R&D spend scope cost reductions in other areas such as sales and marketing spend.

We are excited by the continued development of the Hekmati X portfolio launch and see new products and submitting three new regulatory filings in FY 2025.

So overall, a solid segment results across our various businesses in the first half of 'twenty, five and encouraging momentum into the second half of the year.

We maintain a robust balance sheet with leverage ratio below two times at one seven times net debt to core EBITDA.

This was up slightly versus one four times in December 2024, reflecting our lower EBITDA at <unk> 2025, and higher debt utilization to fund recent acquisitions.

Our low net debt also reflects the healthy level of cash within the business.

We continue to invest in upgrades and new capacity to increase our local production capabilities are reflected in our $68 million in capex in the first half of 2025.

As mentioned at the start our operating cash flow came in at 161 million for the first half of 2025 versus 198 million first half of 2020 for the Delta is primarily due to the timing of tax payments, which would have presented a $60 million cash outflow and etch.

120, 25 versus $2 million in etch one 2024.

Finally, we are pleased to be reiterating our group level full year 2025 guidance with 4% of revenue growth and core operating profit in the range of $730 million to $770 million as we continued to execute on our strategy and the year before.

By predictability.

Okay.

Why do we maintain our group level guidance the segmental contributions change slightly.

For the injectable, we continue to expect strong delivery on the top line, but we now expect a core operating margin.

32% to 33%.

Just did from therapies. This is primarily due to the strengthening of the euro against the U S dollar as well as some inflationary pressure on shipping and other expenses.

In contrast, we expect FX to be a modest tailwind to our branded business and now expect 6% to 7% revenue growth on both a constant currency and reported basis.

Our core operating margin expectation for this segment.

We remain close to 25%.

Our <unk> guidance is unchanged at flat on the top year on year and around 16% core operating margin.

Thank you I will now hand back over to Rio to provide a closer look at our business strategy execution.

Thank you.

As you've just heard we delivered a solid first half with a good momentum heading into the second half.

This performance reflects our continued investment across commercial operational and R&D.

Foundations of our long term growth.

If you look at some of our achievements by business segment, starting with the Injectables, which is our largest business. This business is at an exciting time office development with a range of new initiatives underway across geographies.

Focus on expanding market share has seen a local manufacturing capabilities and strengthening the pipeline with.

We've made strong progress in the first half delivery.

Delivering all of these priorities in Europe, we are gaining market share.

Full launch of new products, and our ability to respond swiftly to the market shortages.

In Mena, where we are a leading supplier of injectable medicines.

We're seeing strong demand across our oncology biotechnology and anti Infectives portfolio. We also launched our first diagnostic product partnership.

Clientele.

And.

The groundwork for future.

And an integrated commercial team to support our upcoming specialty launches, ensuring we're ready to compete in high value segments.

We're also making strong headway in advancing our pipeline across the markets.

We received U S FDA approved for positive.

It was important.

Important additions to our portfolio that reflect our ability to bring high value products to market. These products will be supported by our specialty commercial team unexpected.

Later this year.

Our executive pipeline has expanded significantly growing from 9% to 22 active projects. These span innovators and generics products as well as opportunities for you expense.

Well the Injectables operating profit was down in the first half looking ahead to the second half we expect to return to profit growth.

Supported by a pick up and see them walk duty for Injectables and new product launches.

Beyond 2025 investments, we are making today are set to drive strong revenue growth and profit growth over the medium term.

Maintaining our industry leading margins.

Okay.

Turning to branded this business continues to build impressive momentum.

Delivering strong profitable growth.

Underpinned by our strategic investments in high value treatments for chronic conditions.

In the first half we've broadened our portfolio in oncology diabetes, and multiple sclerosis, driven by meaningful engagements with key opinion leaders.

This is enabling us to deliver greater value to both patients and health care providers across the region.

We have enforced our position in the epilepsy market.

For new launches and we are proud to introduce the first generic version of the key breast cancer therapy in Ontario.

We also initiated our first value added projects, which is equivalent to the 505 <unk> filing in the U S.

Another important step and tailoring our portfolio two regional needs.

Our commitment to manufacturing excellence remains a priority.

Investing in expanding our capacity and capabilities.

Strengthening our role as a trusted local manufacturer of high quality medicines backed by global expertise, notably initiated the expansion plan for new oncology facility.

TSA.

We're also progressing well with the in house transfer of the Takeda portfolio, which will enhance our operational control and efficiency.

I'm excited by the potential of this business stable steady growing operation with an excellent margin profile.

Confident in its continued success.

Finally, our RF, formerly known as generics, we continue to defend and grow our key value drivers, particularly in inhalation and Nashville, where we have strong market positions.

The priority for this business has been to strengthen our pipeline, ensuring we have the capabilities and the partnerships in place to deliver consistent high quality launches over the long term I'm pleased to say that we're making excellent progress.

Increasingly leveraging synergies with our R&D teams, including the co development of solid oral formulation. We have also established new R&D.

And <unk> further broadening our pipeline.

And theres more to come in the second half we plan to file epinephrine nasal spray and important addition to our initial portfolio.

We will also kick off key project to support our innovation pipeline.

Operationally, we are pushing forward with key initiatives, we have delivered on key goals for our CLO business reinforcing our reputation as a trusted partner.

We also expanded our innovation capacity.

It is already translating into increased market share.

Looking ahead, our broad and differentiated pipeline will drive future growth. This business is on a much stronger footing now it is stable and steady growing.

Our margin profile.

Before we close I want to take a step back and reflect on the bigger picture and remind you of our strategic journey.

From inception through 'twenty 'twenty four our focus has been clear strengthening the fundamentals of our business. We've made significant progress during this phase streamlining operations reinforcing our core capabilities.

Building, a strong foundation that positions us well for the future.

Now in 2025 and 2026, we're entering pivotal phase we are significantly investing in our business.

Selling the seeds for long term success. These investments are deliberate and forward looking.

And touring was set up to scale and lead in the years ahead.

From 'twenty to 'twenty seven onwards, we expect to see the return on these investments materialize.

This is one growth with us.

Powered by the groundwork we are laying today.

The progress we've made in the first half across R&D commercial and operations shows that we're delivering what we said we would.

We know there's more work to do but we're confident in our strategy and our execution and in our ability to create long term value.

Hi, Amit.