Financial review

^{Unless otherwise indicated, changes from the previous year are based on nominal figures.}

“Despite a challenging economic environment and continued weakness in some key markets, medmix has delivered strong results in line with our revised guidance, with a significant improvement in cash generation.”

JENNIFER DEAN

CHIEF FINANCIAL OFFICER

Revenue generation

In 2024, medmix generated revenue of CHF 483.9 million, down 0.6% year-on-year. Acquisition effects (+2.6%) more than offset foreign exchange impacts (-1.7%), with underlying organic growth negative year-on-year (1.5%), matching our revised guidance of “flat to negative”. Compared with the second half of 2023, group revenues increased by 1.8%, and by 3.3% organically. Sequentially (second half of 2024 versus first half of 2024), revenues increased by 0.6%.

Healthcare segment revenue remained flat (-0.2%) as foreign exchange effects (-1.0%) more than offset organic growth of (+0.8%) , and the Surgery business unit grew moderately. This growth was offset by negative effects in the Drug Delivery business unit.

The Dental business unit delivered impressive organic revenue growth of 9.6% year-on-year, 16.2% in the second half year-on-year and 10.4% sequentially, confirming the normalization of order patterns and the end of destocking.

Drug Delivery business unit revenue declined by 17.5% organically year-on-year. This was due to the planned increase in the allocation of part of the production for one customer’s devices to a second source manufacturer.

Surgery business unit revenue increased organically by 3.4%. The increase in revenue was primarily driven by new customer orders and new customer market approvals, which more than compensated for some overstocking by OEMs in the prior year. While the first half of 2024 saw a 22.8% organic decrease year-on-year, in the second half of 2024 Surgery business unit delivered resounding growth of 29.7% year-on-year. Sequentially the business unit grew 66.2% in the second half of 2024.

Consumer & Industrial segment organic revenue declined year-on-year by 0.8% and organically by 2.8%, driven by lower launch activity and softer markets in the Beauty business unit and continued softness in end-markets of the Industry business unit.

Industry business unit revenue declined by 3.3% and 2.3% organically, with a foreign exchange impact of -1.0%. Second half year-on-year revenue grew 5.4% organically, though sluggish markets drove a sequential decline 6.5% in the second half of 2024.

After a record 2023 and strong first half of 2024, Beauty business unit revenue increased by 1.1%, driven almost wholly by revenue from Qiaoyi, the acquisition in China first reported in the second half of 2023. Sequentially, second-half revenue in 2024 declined by 5.5%, reflecting slower market activity.

Revenue by business unit

Gross profit

Segment gross profit was broadly stable at CHF 217.5 million, delivering a margin of 45.0%, a year-on-year increase of 50 basis points. This increase was driven by an improved product mix due to a higher share of Dental revenue, at higher than group average margins. In the second half of 2024, segment gross profit margins improved by 70 basis points compared with the second half of 2023 and by 180 basis points compared with the first half of 2024.

Healthcare segment gross profit increased by 1.3% year-on-year to CHF 108.7 million, broadly in line with organic revenue growth, delivering a gross margin of 61.5% (+90 bps), with the Dental business unit revenue growth recovery offsetting pressure within the Drug Delivery and Surgery business units driven by customer mix and project delays.

Consumer & Industrial segment gross profit of CHF 108.8 million decreased by 0.2% year-on-year, delivering a gross margin of 35.4%, an increase of 20 basis points. Efficiency gains in the Industry business unit after the opening of the Valencia plant drove the improvement, supported by a full year of the accretive Qiaoyi acquisition in the Beauty business unit.

Segment gross profit margin

Gross profit, i.e., segment gross profit less the impact of shared costs, production variances and under absorption increased by 1.3% year-on-year to CHF 159.7 million. The gross profit margin reached 33.0%, an improvement of 60 basis points. This improvement was driven primarily by the change in product mix due to higher volumes in the Dental business unit and efficiency gains in the C&I segment.

Operating expenses (OPEX)

OPEX increased by CHF 5.1 million year-on-year reflecting the positive impact in 2023 of CHF 4.8 million on operating expenses relating to the closure of our Poland facility, CHF 5.2 million of impairments in 2024 relating to the Growth & Efficiency program, the impact of the ramp up of the Atlanta and Qiaoyi sites and one-off increases in pension and long-term incentive plans.

Bridge from segment gross profit to operating income (EBIT)

Profitability

Adjusted EBITDA declined by 0.7% to CHF 92.5 million, delivering an adjusted EBITDA margin of 19.1%, at the upper end of our revised guidance for 2024 and flat versus 2023. The improvement in gross margin driven by the favorable product mix and efficiency gains was partly offset by the higher OPEX described above.

Bridge from operating income (EBIT) to adjusted EBITDA

Adjusted EBITDA margin

Financial income and expenses

Total net financial expenses amounted to CHF -13.5 million, compared with expenses of CHF -13.0 million in 2023.  Key drivers were net interest expenses, which increased from CHF -8.7 million to
CHF -10.9 million in 2024 due to higher interest rates on borrowings and net other expenses of
CHF -2.6 million in 2024, compared with expenses of CHF -4.4 million in 2023.

Income tax expenses

Income tax expenses for 2024 amounted to CHF 0.0 million, compared with CHF 2.2 million in 2023. The lower income tax expenses in 2024 were mainly the result of the lower income before tax expenses, tax-deductible impairments of investments in foreign subsidiaries and associates and the non-recognition of tax loss carryforwards.

Net income and adjusted net income

Net income declined to CHF -6.4 million from CHF 0.7 million in the prior period. Higher impairments of assets  and restructuring expenses in 2024 (related to the Growth & Efficiency program) drove the decline, while EBITDA was stable year-on-year.

Adjusted net income declined to CHF 33.4 million from CHF 37.3 million in 2023.

Bridge from net income to adjusted net income

Key balance sheet positions

Total assets as of December 31, 2024, amounted to CHF 954.2 million compared with CHF 1'006.8 million as of December 31, 2023.

Non-current assets decreased from CHF 698.7 million in the previous year to CHF 693.0 million as of December 31, 2024. Additions to intangible assets (CHF 10.0 million), property, plant and equipment (CHF 35.0 million) and lease assets (CHF  2.9 million), primarily reflecting investments in our new Industry production facility in Spain and our new Healthcare manufacturing facility in Atlanta, were more than offset by depreciation (CHF 34.9 million), amortization (CHF 21.5 million), and impairments (CHF 5.2 million). The group also recorded a CHF 5.3 million impairment of an investment in associates in 2024. Currency translation effects increased non-current assets by CHF 10.1 million.

Current assets decreased by CHF 46.9 million to CHF 261.2 million, primarily due to improved net working capital management. The main contributors to this reduction were inventory and trade accounts receivable, each decreasing by CHF 13.0 million. Other current receivables and prepaid expenses decreased by CHF 8.6 million. Cash and cash equivalents decreased by CHF 12.5 million, due to regular cash flow generation, investing activities, and net repayments of borrowings totaling CHF 21.2 million, including CHF 20.0 million on the syndicated credit facility.

Equity amounted to CHF 446.7 million as of December 31, 2024, a decrease of CHF 27.6 million compared with the previous year. This reduction was driven by negative net income of CHF 6.4 million, a dividend of CHF 20.4 million (thereof CHF 15.0 million paid out), cash flow hedges of CHF 5.0 million, remeasurements of defined benefit plans totaling CHF 1.3 million, subsequent measurements of put option liabilities of CHF 5.0 million, and the acquisition of treasury shares worth CHF 0.5 million. Conversely, equity was increased by currency translation differences of CHF 6.7 million and share-based payments of CHF 4.4 million.

Non-current liabilities decreased by CHF 9.8 million versus the previous year to CHF 344.6 million as of December 31, 2024. The main driver was lower non-current lease liabilities, down by CHF 5.9 million compared with the previous year. Deferred income tax liabilities decreased by CHF 2.9 million to CHF 16.5 million as a result of lower temporary differences.

Current liabilities decreased by CHF 15.2 million to CHF 162.9 million in 2024. This was mainly driven by lower current borrowings (CHF 21.2 million) due to the repayment of the syndicated credit facility, lower trade accounts payable (CHF 10.0 million), partly offset by higher other current and accrued liabilities (CHF 17.9 million). Other current and accrued liabilities increased due to higher outstanding dividend payments (CHF 5.5 million) and a liability from sale of investments in subsidiaries which was reclassified from non-current to current liabilities (CHF 11.7 million).

Net debt decreased in 2024 by CHF 13.7 million to CHF 205.3 million. The net debt to adjusted EBITDA ratio improved from 2.35 in 2023 to 2.22 in 2024.

Net debt/adjusted EBITDA ratio

Capital expenditure

Gross capital expenditure in 2024 decreased year-on-year to CHF 45.0 million, primarily due to the exceptional investments made in 2023 in our production facilities in Valencia, Spain, and Atlanta, USA.

Bridge to capital expenditure, net

Cash flow

Cash flow from operating activities increased significantly to CHF 86.6 million, up from CHF 56.1 million in 2023. This improvement was primarily due to better net working capital management, partially offset by lower net income in 2024. The negative net income for 2024 was CHF 6.4 million, compared with net income of CHF 0.7 million in 2023, equating to a year-on-year change of CHF 7.1 million. Current trade assets and liabilities (including inventory, advance payments to suppliers, contract assets/liabilities, trade accounts receivable/payable and other net current assets) decreased by CHF 33.5 million in 2024, whereas they increased by CHF 7.3 million in 2023, resulting in a positive year-on-year impact of CHF 40.8 million. The group paid CHF 22.3 million in interest and income taxes in 2024, compared with CHF 14.2 million in 2023.

Cash outflows from investing activities totaled CHF 51.5 million, down from CHF 80.6 million in 2023. Net cash outflows for intangible assets, property, plant and equipment amounted to CHF 47.0 million, compared with CHF 52.7 million in 2023. In 2024, the group spent CHF 4.5 million on acquisitions of subsidiaries, a decrease from CHF 29.4 million in 2023, and CHF 0.0 million on acquisitions of associates, down from CHF 5.7 million in 2023.

Negative cash flow from financing activities totaled CHF -48.6 million, an improvement from negative cash flow of CHF -153.8 million in 2023. This was primarily because net repayments of borrowings were only CHF 21.2 million, compared with CHF 123.6 million in 2023. Dividends paid to shareholders remained consistent at CHF 15.0 million, while dividends to non-controlling interests in subsidiaries were CHF 0.0 million, down from CHF 1.3 million in 2023. Additionally, the group purchased treasury shares worth CHF 0.5 million, a reduction from CHF 3.1 million in 2023, to manage its share-based payment plans. Lease liabilities paid amounted to CHF 11.9 million, up from CHF 10.4 million in 2023.

The increase in cash flow from operating activities, combined with reduced capital expenditure, resulted in free cash flow of CHF 39.6 million, a significant rise of CHF 36.2 million from CHF 3.4 million in 2023. Additionally, medmix's key metric, adjusted operating net cash flow, which adjusts operating cash flow for capital expenditures and exceptional and non-operating items, almost doubled to CHF 78.9 million, from CHF 40.8 million in 2023.

Bridge from cash flow from operating activities to free cash flow and adjusted operating net cash flow

Outlook

Reference is made to the letter to the shareholders.

Alternative performance measures (APM)

For the definition of the alternative performance measures, please refer to Alternative performance measures chapter.

Abbreviations:

EBIT: Earnings before interest and taxes

EBITDA: Earnings before interest, taxes, depreciation and amortization    
ONCF: Operating net cash flow