In Q1, the Mercator Medical Group earned as much as in the entire last year

In Q1, the Mercator Medical Group earned as much as in the entire last year

Summary of consolidated financial results:

The return to high margins anticipated by the Management Board of Mercator Medical is happening right now, and eventually the company achieved better financial results in Q1 2018 than it had estimated. Consolidated EBITDA of the manufacturer and distributor of single-use gloves more than doubled and reached PLN 7.6 million (+103.9% YOY). This occurred with sales revenues increasing by 21% (to PLN 89.1 million). The net profit allocated to shareholders of the parent company was as much as 491 times higher than a year ago (PLN 4.9 million) and equalled the result for the entire year 2017. In addition, also compared to the results from two years ago (Q1 2016), the increases were significant and amounted respectively to: +50% (revenues), +27% (EBITDA) and 91% (net profit). Such a strong improvement in results is a delayed effect of stabilisation in the market environment and positive trends in latex and glove prices (impact mainly on the production segment), as well as the dollar exchange rate in zlotys (impact mainly on the distribution segment).

“Even our estimates of Q1 results were assessed as spectacular. And yet, we earned even more, maintaining the long-term two-digit growth rate in revenues. This results from the fact that in 2017 we took a number of initiatives to defend margins in a difficult and surprising market environment. At the same time, as we expected, in 2017 and in 2018, each quarter brought better results in the YOY perspective, and we fulfilled the objectives we communicated to our investors”, stresses Wiesław Żyznowski, PhD, President of the Management Board of Mercator Medical S.A.

Although our results for Q1 2018 include still not fully effective production at the new factory, we are entering 2018 with margins far closer to the record-breaking year 2016, while at the same time we have developed the scale of business both in terms of distribution and production since then“”, adds Witold Kruszewski, Member of the Management Board for Finance at Mercator Medical S.A.

In Q1 2018, the Mercator Medical Group increased its sales of gloves by 22.5% YOY, and its sales of nonwoven products by 21.6% YOY, which – with a 10% decrease in sales volumes in a small segment of dressings – led to the glove segment to account for nearly 92% of consolidated revenues. In the most important product line, i.e. examination gloves, quantitative sales increased by 37.5% YOY.

As for our sales in terms of geography, the biggest increases in sales in the production segment were recorded in the USA (including the American customer purchasing gloves through Malaysia), as well as in Saudi Arabia and Spain, whereas in the distribution segment the biggest increases in sales occurred in Poland, Ukraine and Western Europe.

Future results of the Mercator Medical Group will be affected significantly by the effects of implementation of the three-year strategy for 2016-2018. It is based on four pillars, i.e. construction of the nitrile gloves factory, start-up of the nonwoven products factory, expansion in Western Europe (first of all, Germany and Italy) and strengthening of the position in the CEE region as a leading supplier of medical gloves.

As part of the extension of the gloves factory in Thailand by the addition of a synthetic latex gloves production facility (estimated investments: PLN 119 million), four production lines out of eight are already in operation, and full production capacity should be available in the summer this year. At that time, the Mercator Medical Group’s manufacturing capacity in terms of single-use gloves will increase by 150% YOY and reach 3 billion gloves per year. On the other hand, construction of the nonwoven fabric product manufacturing plant in Poland (investment of PLN 3.9 million) was completed in the summer 2017 and in Q4, after the certification period, we started selling products from the new facility to external customers. The purpose of this investment is to significantly increase the operational and financial efficiency related to the assortment distributed so far, for example surgical drape sheets.