Mercator Medical exceeded the threshold of PLN 300 million in revenues

• The long-term trend in sales growth continues; in the difficult year 2017 a significant recovery of financial results in successive quarters following the positive market trends (decreased prices of natural latex, decreased USD/PLN exchange rate); In Q4 a significantly lower USD/PLN exchange rate with negative impact on revenue dynamics;
• Distribution segment: a series of measures were taken to strengthen the position within the CEE and distribution started in Germany and Italy;
• Production segment: in Q4, sales of nonwoven products from the facility in Poland started, and the first two production lines were launched in the new nitrile gloves factory under construction in Thailand – the project in line with schedule and budget will increase the Group’s production capacity by 150% from 2H 2018.

Summary of consolidated financial results:

In 2017, the Mercator Group – a manufacturer and distributor of single-use gloves – earned record-breaking revenues of PLN 300.6 million. Especially during the first half of the year, due to the unfavourable environment associated with exceedingly high fluctuation of natural latex prices (impact mainly on the production segment) and the dollar exchange rate in zlotys (impact mainly on the distribution segment), profitability of the business significantly decreased, and positive trends in the business environment were reflected in the recorded results with a delay.

“We launched a number of initiatives to defend margins in this market environment so challenging and surprising for the industry. At the same time, as we expected, in each successive quarter of 2017 we recorded relatively better results YOY. While in Q1 the net profit was 93% lower than the year before, in Q4 it was only 21% below the level achieved in the previous year. We are seeing a systematic return to higher margins and we are optimistic about subsequent periods” says Witold Kruszewski, Member of the Management Board for Finance at Mercator Medical S.A.

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, and strengthening of the position in the CEE region.

As part of the extension of the gloves factory in Thailand by the addition of a synthetic latex gloves production facility (estimated investment: PLN 119 million), four production lines out of eight are already installed, 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.

“In 2017, we built solid foundations for dynamic revenue and profit growth. In the production segment, the new nitrile gloves factory is crucial due to its scale. The full capacity of production, sales and output, as well as the synergy resulting from having two factories, are going to be achieved in the second half of this year. At the same time, in the distribution segment, which now generates the majority of sales, we have taken steps to strengthen our position in the CEE region and to start organised distribution under our own brands in Western Europe, i.e. in Germany and Italy”, emphasises Wiesław Żyznowski, PhD, President of the Management Board, Mercator Medical SA.

At the end of this year, Mercator Medical intends to publish a development strategy for 2019-2021.