Oslo, Norway, 25 January 2017
Norwegian pharmaceutical company Vistin Pharma ASA announced today a trading update in connection with two earlier public announcements made during the fourth quarter of 2016.
As announced on 18 November, Vistin Pharma experienced a temporary stop in the production of metformin at its plant in Kragerø. This has had a negative impact on the fourth quarter results with lower volumes available for sale and one-off operating costs leading to a negative EBITDA impact of approximately NOK 6.8 million.
As part of the Company's operational excellence programme within tablet manufacturing (the CMO business), Vistin Pharma announced a cost savings plan on 5 December. Associated with this is a NOK 5.8 million provision for redundancies, which has been incurred during the fourth quarter.
Preliminary adjusted EBITDA for the fourth quarter 2016 is negative NOK 1.8 million, compared to NOK 4.3 million in the same quarter of 2015, with preliminary adjusted EBITDA for the full year of NOK 29.2 million, compared to NOK 19.2 million in 2015. The adjusted results for the fourth quarter include an impact of approximately NOK 5.1 million from the lower volumes available for sale, caused by the temporary stop in production of metformin. Excluded from adjusted EBITDA for the quarter is a NOK 5.8 million provision for redundancies relating to the ongoing CMO cost savings programme, and NOK 1.7 million in one-off costs relating to the reactor failure.
The Company had cash and cash equivalents of NOK 89.4 million at 31 December 2016.
"Whilst our financial figures for the fourth quarter reflect some unexpected costs and provisions related to our CMO operational excellence programme we feel that these changes will significantly strengthen our position in the CMO market. I am also pleased to report that we are now back to producing metformin at full capacity and with Q1 orders already accounting for our total volume for sale we are confident this issue has now been resolved," says CEO Kjell-Erik Nordby.
Metformin plant in full production from 18 December
Production at Vistin Pharma's metformin plant was temporarily halted in November due to an unscheduled maintenance stop to repair one of the reactors. A new reactor was installed successfully and on time, and the plant resumed full production on 18 December. As per today, the plant has produced 320 metric tonnes (MT) of metformin.
The reactor failure resulted in on-off operating costs of approximately NOK 1.7 million. Approximately 261MT in sales volume was also lost in the fourth quarter due to the production stop. In total, these incidents had a negative EBITDA impact of approximately NOK 6.8 million during the fourth quarter. Further, the installation of a new reactor has resulted in a capital expenditure of approximately NOK 2.2 million.
The total actual sales volume of metformin API for the fourth quarter was 613MT, compared to 608MT in the same quarter of 2015. For the full year actual sales volume was 2,784MT, compared to 2,799MT last year. The Company has orders for approximately 770MT for the first quarter 2017, compared to actuals sales of 704MT in the same quarter in 2016, and the temporary stop in production in the fourth quarter 2016 is not expected to have a negative impact on sales volumes going forward.
CMO cost savings programme to reduce annual costs by NOK 20 - 30 million
On 5 December 2016, Vistin Pharma announced a cost savings plan to improve the Company's competitiveness within tablet manufacturing. The plan includes a staff reduction of 20-25 full-time employees at the Company's tablet manufacturing facility, which upon completion in early 2018 will result in annualised cost savings in the range of NOK 20-30 million.
A provision for redundancies and reorganisation of NOK 5.8 million was made in the fourth quarter mainly relating to termination contracts entered into as of 31 December 2016. The provision covers salary costs during the termination period, as well as severance pay. As a result of the employee reductions, total personnel expenses within CMO are expected to be reduced by approximately NOK 9 million in 2017 when compared to 2016 (excluding any one-off provisions for redundancies). Total costs are expected to be reduced by a further NOK 10-20 million in 2017 to 2018.
These cost savings significantly strengthen the Company's competitiveness in the international CMO market, and enable Vistin Pharma to offer competitive prices for tablet manufacturing going forward. Vistin Pharma's target is to increase its production capacity from today's level of 750 million tablets by at least 50 per cent via the ongoing operational excellence program.
Preliminary financial information full-year 2016 - adjusted EBITDA 29.2 million
| (NOK million) | Q4 2016 | Q4 2015 | FY 2016 | FY 2015 |
| Total revenue and income | 93,5 | 104,5 | 394,6 | 227,9 |
| Preliminary EBITDA | (9,3) | 13,0 | 21,7 | 27,9 |
| Adjustments relating to specific items: | ||||
| Costs relating to the reactor break-down | 1,7 | - | 1,7 | - |
| Provision for employee reductions & reorganisation | 5,8 | - | 5,8 | - |
| Oher income relating to Weifa settlement * | - | (8,7) | - | (8,7) |
| Preliminary adj. EBITDA | -1,8 | 4,3 | 29,2 | 19,2 |
| * Shown net of a NOK 2.5 million of sundry assets transferred from Weifa and written off. | ||||
Vistin Pharma will present the full financial figures for the fourth quarter of 2016 on 28 February.
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For further information, please contact:
Kjell-Erik Nordby
CEO
+47 91 36 42 80
kjell-erik.nordby@vistin.com
Gunnar Manum
CFO
+47 95 17 91 90
gunnar.manum@vistin.com
About Vistin Pharma
Vistin Pharma is a Norwegian pharmaceutical company producing Active Pharmaceutical Ingredients (APIs) and solid dosage forms for the global pharmaceutical industry. The Company has key positions in the Metformin and Opioids markets, and a strong foundation for creating a highly efficient Contract Manufacturing tablet production (CMO) business. Solid growth potentials exist in all the business segments.
With more than 65 years of pharmaceutical industry experience, Vistin Pharma has built significant capacity and expertise as an API provider. The Company has more than 140 highly qualified employees and two manufacturing facilities in Kragerø, Norway. Both facilities are certified according to current Good Manufacturing Practice (cGMP) and successfully inspected by the US Food and Drug Administration (FDA) in 2014. Vistin Pharma's headquarter is in Oslo, Norway.