Samsung Biologics continued its revenue growth in the third quarter, driven by expanded plant operations and the acquisition of its U.S. production facility. The company maintained high utilization rates at its existing plants while ramping up operations at Plant 5 and fully recognizing revenue from the Rockville facility, leading to an upward revision of its annual revenue growth forecast to 20%.
Samsung Biologics announced on October 21 that its consolidated revenue for the third quarter reached 1.49 trillion won, a 19% increase from 1.25 trillion won in the same period last year. Operating profit rose slightly from 633.5 billion won to 640.1 billion won.
Despite the revenue increase, the growth rate of operating profit was modest. A company representative stated, "The full operation of Plants 1-4, the ramp-up of Plant 5, and the recognition of revenue from the Rockville facility acquired in March contributed to our performance growth."
The company adjusted its annual revenue growth guidance from a previous estimate of 15-20% to a solid 20%. This decision reflects strong sales from Plants 1-4, expected revenue from certification batches at Plant 5 in the second half of the year, and stabilization of commercial production at the Rockville facility.
As of the end of the third quarter, the company maintained a stable financial structure with a debt ratio of 45.8% and a borrowing ratio of 9.2%.
Business expansion is also ongoing. Since its founding, Samsung Biologics has accumulated 117 contracts for contract manufacturing (CMO) and 184 contracts for contract development (CDO), with a total order value reaching $22 billion. In its public tender offer for the global peptide contract development and manufacturing organization Polypeptide Group, the company secured 87.88% of the tendered shares, exceeding the minimum requirement of 66.7%. The company plans to finalize the transaction pending approvals from authorities in Europe, India, Australia, and Brazil.
However, uncertainty persists as the union has postponed its second general strike, but negotiations with management remain unresolved, indicating potential challenges in the fourth quarter.
The Samsung Biologics union initiated a full strike from May 1-5 after negotiations with management broke down on March 23. The estimated loss from that strike was around 150 billion won. Although three rounds of government-mediated negotiations have taken place since then, no agreement has been reached regarding wage increases and improvements to personnel systems.
The union had initially announced plans for a second general strike starting October 26 for three weeks. However, the Seoul High Court expanded the scope of prohibited strike actions from three to nine processes on October 16, hindering the strike. The union has temporarily postponed the second general strike and requested the resumption of negotiations with management.
The company estimates that a three-week halt in cultivation and purification processes could result in an immediate loss of 640 billion won. Due to the continuous nature of the production process, a shutdown could lead to protein degradation, potentially requiring the disposal of the entire batch.
Industry experts express concerns that if the second strike proceeds, it could lead to revenue losses, production delays, and a decline in customer trust. The outcome of the strike and negotiations could significantly impact fourth-quarter performance.
Korea Investment & Securities analyst Lee Ji-hoon noted, "Given the nature of CMO contracts, stability in the supply chain and labor relations in terms of environmental, social, and governance (ESG) factors will be key evaluation criteria for potential clients. Whether the two sides can reach an agreement by the end of October will be a major variable."
* This article has been translated by AI.
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