Semperit earnings drop 70% as glove demand eases

VIENNA—Semperit A.G. Holding has seen a significant decline in first quarter results, against an exceptionally strong comparison base of 2021.

Earnings (EBITDA) for the three months ending March 31 fell 70 percent to $38.3 million (€36.5 million) on 14 percent lower sales of $238 million, Semperit said in a May 18 news release.

The decline in sales was largely driven by a drop in demand for medical gloves as the COVID-19 pandemic eased globally.

As a result, Semperit said, the Sempermed medical sector recorded a decline in revenue of 45 percent to $111 million during the first quarter of the year.

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 a strong growth during the quarter.

The segment posted a 31.4-percent year-on-year increase in revenue to $179.3 million, reflecting growth in sales across all businesses.

Semperit linked the growth in sales to the "active increase" of average sales prices across all segments, which helped pass on most increases in raw material and energy costs.

Group earnings were down due to end of "exceptional boom" brought about by the pandemic.

In addition to the decline in sales, other challenges such as rising costs affected earnings during the period.

This, Semperit said, included a 12-percent impact of higher costs of energy and purchased services; an 11-percent impact of labor and a 38-percent negative impact of other operating expenses such as outgoing freight costs and energy costs outside of production.

The earnings margin fell sharply from 37.8 percent in the first quarter of 2021, to 13.2 percent this year.

Despite the declines, Semperit said the results showed a "strong performance" and its figures were above the pre-pandemic level in the first quarter of 2019.

The Austrian group, however, warned that the challenging market conditions could further impact results during 2022.

The group expects to see the "delayed" negative impact of the Ukraine war on supply chain and raw material procurement later in the year, according to CFO Petra Preining.

As a result, she said, Semperit "cannot rely on the assumption that we will be able to sustain these positive results as the year goes on."

The Vienna-based group expects price levels for medical products to normalize throughout the year, although uncertainty continues due to widely varying regional trends.

Group results will also continue to depend heavily on the availability and prices of the raw materials, supply chain, energy price trends and the availability of containers.

In addition, Semperit said the war on Ukraine has already had direct and indirect negative influences on its sales volume and revenue figures, albeit limited.

As a result of the war, the group anticipates further impending material bottlenecks, energy and raw material price increases, transport and supply chain problems, changes in the interest rate landscape, increased inflation, and an increased risk of cyberattacks.

Furthermore, materials shortage for the manufacture of vulcanized polymer products could lead to production constraints in the second half of the year.

"Despite the very positive first quarter, the management of the Semperit Group expects that the annual result for 2022 is likely to fall significantly short of the average market expectations."

Semperit announced in March that it expected earnings to come in at about $105 million to $126 million.

The group did not provide an updated outlook for the full year.