Samsung Biologics continued its solid growth in the second quarter, meeting market expectations with strong performance. The company attributed its revenue and profit increases to full operation of its production facilities and favorable exchange rates. However, union-related risks are expected to pose challenges in the second half of the year.
On July 23, Samsung Biologics announced that it recorded a revenue of 1.32 trillion won and an operating profit of 586.4 billion won for the second quarter. This represents a 30% increase in revenue and a 23% increase in operating profit compared to the same period last year. The operating profit margin remained above 40%.
The results reflect the full operation of its first to fourth plants and the positive impact of favorable exchange rates. Although there were some production delays, the contribution from new facilities offset these issues, allowing the company to maintain double-digit growth. Notably, the company demonstrated a stable profit generation structure, maintaining high profitability even before the full revenue recognition from its fifth plant and the production facility in Rockville, USA.
Looking ahead, additional growth is anticipated in the second half of the year. As revenue contributions from the Rockville facility and the fifth plant in Songdo ramp up, there is potential to achieve the upper end of the annual revenue growth guidance of 15-20%. Market analysts suggest that the annual performance may exceed previous forecasts due to increased operating rates at the Rockville plant.
The company’s financial structure remains stable, with total assets of 12.65 trillion won, equity of 8.36 trillion won, and liabilities of 4.29 trillion won as of the end of the second quarter. The debt ratio stood at 51.3%, and the borrowing ratio was 11.5%.
Samsung Biologics is also accelerating its global business expansion and securing new modalities. The company is establishing a sales office in Europe, aiming to build a sales network that covers the three major global biotech markets, including the United States and Japan. Recently, it diversified its business portfolio by acquiring the global peptide CDMO company Polypeptide Group for approximately 2.7 trillion won.
However, union risks are expected to impact performance in the second half of the year. Starting in the third quarter, costs related to union strikes and wage negotiations are anticipated to affect profitability.
Analysts view one-time costs resulting from labor negotiations as a key variable. If an agreement is reached that includes wage increases and bonuses, related labor costs could be reflected all at once. Some analysts warn that if wage increases exceed expectations, it could impact operating profit margins in the following year.
Lee Ji-soo, a researcher at Daol Investment & Securities, noted, "The production disruptions and some batch disposal costs from the union strike in May are expected to be reflected in the third quarter." Jeong Yi-soo, a researcher at IBK Investment & Securities, explained, "The partial strike by the union from May 1 to May 5 caused some production delays, but the estimated revenue loss of about 150 billion won is expected to be recognized in the third quarter."
Labor-management conflicts remain unresolved. Since the union initiated a full strike in May, it has been unable to narrow its differences with management. The company estimates that the strike has resulted in a revenue loss of approximately 150 billion won.
The union is demanding an average base salary increase of over 14%, a bonus of 30 million won per person, and the distribution of 20% of operating profit as performance bonuses, along with the elimination of upper limits. In contrast, management has proposed a 6.2% increase in base salary and a one-time payment of 6 million won, indicating significant differences in their positions. Samsung Biologics stated that it is committed to resolving the labor-management conflict through dialogue.
* This article has been translated by AI.
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