Tecan provides update on current trading and revised outlook for
full year 2024
Ad hoc announcement pursuant to Article
53 of the SIX Exchange Regulation Listing Rules
Tecan provides update on current trading
and revised outlook for full year 2024
- Substantial reductions in OEM customer forecasts as the
main factor negatively impacting outlook for 2024 since last update
in August
- Life Sciences Business continues to face a challenging
market environment but is showing sequential growth in the second
half of 2024
- Rigorous cost-down program being executed
- Positive mid-term outlook ahead of upcoming Capital
Markets Day
- Major innovations in the Life Sciences Business and a
robust project pipeline in the Partnering Business to be
presented
Männedorf, Switzerland, October 16, 2024 – The
Tecan Group (SIX Swiss Exchange: TECN) today announced an update on
its current trading and revised outlook for the fiscal year
2024.
Outlook for full year 2024
Since the publication of financial results for the first half of
the year on August 13, 2024, financial performance has fallen short
of expectations across both divisions, with a notable absence of
the anticipated increase in order entry. Specifically, Partnering
Business customers for life sciences-related instruments and those
with considerable exposure to the Chinese market have deferred
significant levels of demand into 2025. Additionally, instrument
orders from the BioPharma sector in the Life Sciences Business
continue to experience delays. No significant short-term
improvement in current market conditions is anticipated, nor is any
impact from the new China stimulus program in 2024.
Given the current market landscape, Tecan now projects a decline
in sales in local currencies of 12-14% for the full year 2024,
compared to the previous forecast of sales ranging from flat to a
mid-single-digit percentage decrease. In response to lower sales
volumes, Tecan has adjusted its profitability outlook and
implemented a rigorous cost-down program, which includes structural
changes to the cost base and stringent cost management measures.
These actions are designed to mitigate margin pressures and ensure
the company is well-prepared should the challenging market
conditions continue longer. For full year 2024, the company now
anticipates an adjusted EBITDA margin, excluding acquisition- and
integration-related costs, of 16-18% of sales (previously
18-20%).
Market conditions and business segment
developments
Tecan continues to navigate a challenging market environment
characterized by general market weakness in China, impacting both
direct sales and indirect business through global OEM customers.
Additionally, reduced spending in the biopharmaceutical industry
has led to decreased demand for life science research instruments,
affecting both the Life Sciences Business and the Partnering
Business through lower OEM customer demand.
Life Sciences Business (end-customer
business)
The ongoing market weakness in China, where the stimulus program is
not expected to have any impact in 2024 and has led some customers
to delay orders while awaiting funding decisions, continues to pose
challenges. Additionally, reduced pharma CAPEX spending remains a
significant hurdle, with BioPharma customers continuing to delay
projects, resulting in revenues being deferred to 2025. Despite
these challenges, overall developments in the Life Sciences
Business are showing signs of recovery. As a result, only a
moderate segment sales decline in local currencies is expected for
the second half of 2024, following a -15.5% decline in local
currencies for the first half of the year. Sequentially, comparing
the second half of 2024 to the first half of 2024, the Life
Sciences Business segment is expected to show substantial growth.
This expectation does not include any year-end budget flush in
academic accounts or those of other customers, as typically seen in
pre-pandemic years. Contributing to the more positive sales
development in the Life Sciences Business are recovering
consumables sales post-pandemic, a solid service business due to a
higher installed base of instruments, and continued strong demand
for newly launched products, particularly in clinical
diagnostics.
Partnering Business (OEM
business)
In the Partnering Business, the aforementioned factors have led to
further substantial reductions in OEM customer forecasts for the
full year 2024, negatively impacting Tecan’s outlook for the
remainder of the year. Demand for life science instrumentation
remains low due to slow CAPEX spending in the pharma, academic, and
government segments, impacting both the Cavro® OEM
components business and the contract development and manufacturing
revenues for life science instruments in the Paramit product
line.
Weakness in the China market is impacting the Cavro OEM components
business and sales of in-vitro diagnostics systems in the
Synergence™ product line to larger global OEM customers with
significant China exposure. This has led to a reduction in
anticipated order entry for 2024 and a substantial deferral of
revenues into 2025.
However, outside China, sales of in-vitro diagnostics systems in
the Synergence product line are developing positively, with
increased contributions from newly launched systems. Similarly,
sales in the Paramit product line serving medical market customers
are expected to remain close to the high level of the prior year
when adjusted for pass-through material costs.
Positive mid-term outlook ahead of upcoming Capital
Markets Day
Tecan views these market weaknesses as temporary. The company
remains well-positioned, supported by robust underlying megatrends
driving increased demand for healthcare solutions. At the upcoming
Capital Markets Day on October 22, 2024, Tecan will reaffirm its
mid-term outlook, expecting to continue outperforming the average
growth rate of the underlying end markets and enhancing
profitability.
Tecan anticipates returning to average organic growth rates in
the mid to high single-digit percentage range in local currencies
under normal market conditions, with underlying market growth of
3-5%. Profitability is expected to be enhanced through operational
efficiencies, cost discipline, synergies, vertical integration, and
modularity in R&D, leading to an average annual increase in the
adjusted EBITDA margin of +30-50 basis points, based on the
original 2024 outlook of around 20%.
Building on a proven track record of above-market growth and
margin expansion over the past years, Tecan’s resilient and
growth-driven financial profile, strong cash conversion, and
CAPEX-light requirements enable the company to continue executing
an accretive M&A strategy.
At the upcoming Capital Markets Day, Tecan will highlight the
strategic growth drivers that enable the company to capitalize on
industry megatrends, delivering above-market growth and increased
profitability.
In its Life Sciences Business division, building on its globally
leading position in lab automation, Tecan will present
groundbreaking innovations and product launches that will redefine
automation for high-growth applications.
For the Partnering Business division, Tecan, as the trusted
healthcare OEM partner, will showcase a robust project pipeline
across all three service offerings, serving dynamic healthcare
segments.
Key upcoming dates
- A Capital Markets Day will be hosted on
October 22, 2024
- The 2024 Annual Report will be
published on March 12, 2025
- The Annual General Meeting of Tecan’s
shareholders will take place on April 10, 2025
About Tecan
Tecan (www.tecan.com) improves people’s lives and health by
empowering customers to scale healthcare innovation globally from
life science to the clinic. Tecan is a pioneer and global leader in
laboratory automation. As an original equipment manufacturer (OEM),
Tecan is also a leader in developing and manufacturing OEM
instruments, components and medical devices that are then
distributed by partner companies. Founded in Switzerland in 1980,
the company has more than 3,500 employees, with manufacturing,
research and development sites in Europe, North America and Asia,
and maintains a sales and service network in over 70 countries. In
2023, Tecan generated sales of CHF 1,074 million (USD 1,194
million; EUR 1,108 million). Registered shares of Tecan Group are
traded on the SIX Swiss Exchange (TECN; ISIN CH0012100191).
For further information:
Tecan Group
Martin Brändle
Senior Vice President, Corporate Communications & IR
Tel. +41 (0) 44 922 84 30
Fax +41 (0) 44 922 88 89
investor@tecan.com
www.tecan.com
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