Semperit A.G. to sell medical glove segment for $122.1 million

VIENNA, Austria—After a year of precipitous decline in sales of medical gloves, Semperit A.G. Holding will sell its Sempermed business unit to Singapore-based Harps Global Pte. Ltd.

The transaction, valued at approximately $122.1 million and signed Dec. 16 in Vienna, is expected to be finalized in the second quarter of 2023.

An impairment reversal of between $31.8 million and $37.2 million for the assets of Sempermed is expected.

The Southeast Asian firm Harps Holdings typically invests in energy, property, marine, financial and biomedical products, according to the firm's Bloomberg profile. The company maintains manufacturing facilities in Malaysia.

It is unclear which Sempermed (surgical and examination gloves) facilities are part of the sale, though Semperit did say that, at least for the next "several years," its surgical glove production facility in Wimpassing, Austria, and related packaging facility in Sopron, Hungary, will not be part of the deal. Those facilities, though, will serve as a contract manufacturer supplying Harps Holdings during that period.

Sempermed also has a manufacturing location in Kamunting, Malaysia.

The exact impairment charge that Semperit will take for the Sempermed assets will be announced with Semperit Group's full-year financial disclosure for 2022, set for March 22, 2023.

Since early 2020, Semperit had been saying the sale of its medical unit—Sempermed—was imminent.

The firm's goal at the time was to move out of the medical sector and transform Semperit into a company solely focused on its expanding industrial businesses: Semperflex, Sempertrans, Semperseal and Semperform.

As the pandemic took hold and demand skyrocketed for examination and surgical gloves, the business segment saw revenue as high as $537 million in 2020.

In fact, the overall group achieved the "best results in its recent corporate history" for the year 2020, as earnings (EBITDA) tripled year-on-year to $247 million, on 10.4 percent higher sales of $1.1 billion.

The company kept Sempermed throughout 2021, delaying the divestment in March 2021 and again in August 2021.

But in 2022, as of the end of the third quarter, Semperit Holding A.G. had seen a 73.5-percent decline in earnings for the first nine months of the year, due mainly to a decline in demand for rubber gloves and a strong comparison base from the year before.

EBITDA (earnings) fell to 86 million euros over the first nine months of this year, representing an earnings margin of 10.3 percent, down 24.7 percentage points from the first three quarters of 2021.

Revenue for the period fell 10.4 percent, reflecting a 47-percent decline in medical gloves sales to $287.6 million.

The medical unit saw earnings go into negative territory with a loss of $4.2 million in the third quarter of 2022, compared to the third quarter of 2021.

By contrast, Semperit's industrial sector—including Semperflex hose production unit, Sempertrans conveyor belts, Semperform gasket and sheeting unit and Semperseal seals manufacturing business—recorded strong growth during the quarter.

The unit reported 36.5 percent higher sales to $592.1 million, as all segments saw sales increase during the first nine months of the year, with the exception of Semperseal.