Semperit reports 70% drop in first half earnings

VIENNA—Semperit Group has recorded a sharp drop in earnings in the first half of 2022, amid increasing costs pressure and a sharp drop within its glove-manufacturing medical business Sempermed.

First half earnings (EBITDA) declined 70 percent to $75.5 million, on 13.6-percent lower sales of $572.7 million, which was driven by "the expected slump in the medical business," the Austrian group reported Aug. 17.

During the period, the Industrial Sector—which includes Semperflex, Sempertrans, Semperform and Semperseal—achieved strong 64.4-percent increase in earnings to $68.3 million on 38.9-percent higher sales of $373.8 million.

This, Semperit said, was primarily due to the increase in average sales prices in all segments, which enabled the "quick" passing through of raw material and energy price increases.

By contrast, the medical sector reported a 92.9-percent decline in earnings to $15.7 million, as sales fell 49.5 percent to $199.1 million.

Semperit linked the decline to a sharp fall in price levels following the end of the boom in demand for medical protective gloves.

Average sales prices in the first half of the year were still above the pre-coronavirus level, said Semperit, adding that prices continue to fall.

Operating results for the period were burdened by significant cost increases and the medical unit's "return to normality" following two years of strong performance.

For the full year outlook, Semperit said it expected "a significantly weaker result" for the second half of 2022, confirming the guidance published in March.

The Austrian group will also "bring back into focus" plans to divest its medical business, a decision made in January 2020 and put on hold during the COVID-19-related high demand.

Semperit said the second half of the year is generally the weaker half for the group due to seasonal cyclicality.

"Regularly planned maintenance and plant closures in summer and Christmas reinforce this effect," it added.

In the medical sector, the easing of COVID-19, the faster-than-expected return to a buyer's market, and overcapacity caused by global expansions will mean "a significantly weaker contribution," which will burden the group results.

Furthermore, the Vienna-based group also anticipates annual results to be influenced by developments such as the Russia-Ukraine war, and particularly the risk of sanctions on special raw materials and consumables, which are necessary for the production of vulcanized rubber products.

In addition, price increases for raw materials, Europe's energy crisis and road freight woes will likely influence the group's annual performance.