Tecan Navigates Challenging Market Conditions, Remains Poised for Future Growth

Tecan Group AG, a leading provider of laboratory automation solutions, has announced its financial results for the first half of 2024, along with a revised outlook for the full year. The company faced a challenging market environment, marked by reduced spending in the biopharma sector and broader weaknesses in the life science research industry, particularly in China. Despite these headwinds, Tecan remains confident in its ability to navigate the current landscape and capitalize on the robust underlying trends driving increased demand for healthcare solutions.

Empowering Innovation and Resilience in the Face of Adversity

Navigating a Shifting Landscape

Tecan CEO Dr. Achim von Leoprechting acknowledged the company's recent challenges, stating, "In the first half of the year, we faced a challenging market environment characterized by reduced spending in the biopharma sector, which led to softness especially in our instrument business. Additionally, the end markets in life science research have faced broad but, in our view, temporary challenges." The CEO also noted the impact of general market weakness in China, which affected both Tecan's direct sales and its indirect business exposure through global OEM customers.Despite these obstacles, Tecan remained focused on innovation and product development, making significant strides in launching and successfully commercializing new products targeting key application areas such as genomics, proteomics, and cell biology. The company's Partnering Business also saw robust project activity and product launches across its Synergence, Cavro, and Paramit business lines, demonstrating its ability to adapt and thrive in the face of adversity.

Revising Outlook and Implementing Cost-Saving Measures

In response to the weaker-than-expected demand, Tecan has revised its full-year 2024 outlook, anticipating that the softness in certain segments will persist longer than originally anticipated. The company now expects full-year 2024 sales in local currencies to range from on prior-year level to a decrease in the mid single-digit percentage range, down from the previously expected low single-digit percentage increase.To mitigate the impact of lower sales volumes on profitability, Tecan has defined and implemented rigorous cost management and cost-saving measures. The company now expects an adjusted EBITDA margin, excluding acquisition- and integration-related costs, of 18-20% of sales, down from the previously expected at least around 20% of sales.

Maintaining a Resilient Outlook

Despite the current challenges, Tecan remains confident in its long-term prospects. The company views the market weaknesses as temporary effects and believes it is well-positioned to capitalize on the robust underlying trends driving increased demand for healthcare solutions. Tecan is further expanding its leading position through the continuous launch of innovative products and new partnerships, and it is committed to leveraging its strong financial position for strategic inorganic growth through M&A.Tecan's CEO reiterated the company's mid-term outlook, expecting to continue outperforming the average growth rate of the underlying end markets and anticipating a return to average organic growth rates in the mid to high single-digit percentage range in local currencies, while continuously improving profitability.

Strengthening Global Presence and Operational Excellence

Tecan's global expansion efforts continued in the first half of 2024, with the establishment of a direct sales office in South Korea following the acquisition of a long-standing distributor in the region. This move strengthens the company's local market knowledge and enables it to serve the growing life science research and healthcare market in South Korea more effectively.Furthermore, Tecan successfully passed an extensive FDA inspection at its facility in Penang, Malaysia, underscoring the strength of its operational processes and business management practices. This achievement paves the way for future production of medical devices, including class 3 medical devices, and supports the company's growth aspirations.

Advancing Sustainability and Transparency

Tecan continues to prioritize sustainability and transparency, with the publication of its 2023 Sustainability Report as part of the Annual Report 2023. The report was put to a shareholder vote for the first time at Tecan's AGM in April 2024, receiving almost 100% approval, demonstrating the company's commitment to sustainable practices and stakeholder engagement.Additionally, Tecan completed its climate scenarios risk analysis in the first half of the year, laying the groundwork for full TCFD (Task Force on Climate-related Financial Disclosures) reporting later in 2024. This initiative aligns with the company's efforts to provide investors with comprehensive information on its climate-related financial risks and opportunities.