Financial outlook
Latest outlook from nine-month interim report (Q3) 2024 released on 14 November 2024
OUTLOOK FOR 2024
The outlook is unchanged:
- Revenue is still expected to grow by 14-16% organically in local currencies on broad-based growth across sales regions and product groups. European tablet sales remain key to growth.
- The EBIT margin is still expected to improve to 19-21% vs. 14% last year, mainly driven by high sales growth.
The outlook is based on the following assumptions:
Revenue
Europe is expected to deliver robust, double-digit revenue growth, while single-digit growth is projected in North America and International markets.
European tablet sales are expected to be the main growth driver. Growth in European tablet sales is expected at a level significantly above the growth in 2023, mainly driven by the past years’ inflow of new patients and improved pricing. Tablet sales in North America and International markets are also expected to grow, albeit at lower rates than in 2023.
Combined sales of SCIT/SLIT-drops are now projected to grow by mid to high single-digits (previously: high-single digit), driven by increasing SCIT and SLIT-drops sales in Europe while ALK now expects low growth for North American SCIT-sales.
Sales of other products are still expected to grow by mid to high single digits, led by the normalisation of market supply of the adrenaline autoinjector Jext®. Sales of other products in North America are assumed to decline following continued market volatility.
Revenue growth in Q4 is anticipated to be lower than in Q2 and Q3 of this year: Q4 will be impacted by fluctuations in the timing of product shipments to International markets with no SCIT shipments planned for China during the renewal of ALK’s import license and lower tablet shipments planned for Japan. Moreover, sales growth in North America is expected to continue at a low level because of weak developments in legacy products and a lower impact from recent improvements to the average selling prices for tablets in the USA.
While still early in the 2024/25 initiation season, the forecast assumes an average new patient inflow in Q4 which is indicated to be lower than the exceptional 2023 initiation season, but still better than in 2022.
Margins
The gross margin is now expected to increase by more than 1 percentage point (previously: around 1 pp). The margin will benefit from changes to the sales mix, improved pricing, and efficiencies. Inflationary pressures in product supply will partly offset these positive factors.
Capacity costs
The capacity cost-to-revenue ratio is expected to further improve as ALK capitalises on existing platforms to enhance efficiencies, reduces R&D spend, and implements optimisation measures. R&D expenses are projected to decline to around 10% of the expected revenue, while increases are assumed for both sales and marketing expenses and administrative costs.
The outlook for capacity costs still includes approximately DKK 60 million in one-off costs associated with the previously announced optimisation initiatives. ALK may entail additional costs associated with revisions of its Chinese plans and activities. Any such costs will be kept within ALK’s current earnings outlook.
Other assumptions
- The European AIT markets are generally expected to be stable. Exceptions include the reversal of last year’s mandatory rebate increase in Germany and the possibility of minor adjustments in selected Southern European markets.
- Respiratory infection waves across markets are not assumed to materially affect capacity at allergy clinics or patient behaviour, nor are they likely to impact ALK’s activities.
- Changes in consumers’ spending power are not expected to materially affect demand for AIT.
- CAPEX investments are now projected at around DKK 350 million (previously: 400), and ALK plans to continuously build up inventories in support of revenue growth. As a consequence of the upfront payment related to the license agreement with ARS Pharma, free cash flow is now expected to be negative at around DKK 500 million.
- The outlook does not include any revenue from new acquisitions, new partnerships or in-licensing of products and services, nor does it include payments in relation to new M&A or in-licensing.
- The outlook is based on current exchange rates, resulting in an immaterial currency effect on reported growth in revenue and a minor negative effect on reported growth in EBIT.
Latest outlook from six-month interim report (Q2) 2024 released on 22 August 2024
OUTLOOK FOR 2024
With reference to Company Announcement no. 15/2024, the full-year financial outlook has been upgraded primarily to reflect the strong sales of tablets and injection- and drop-based allergy immunotherapy products (SCIT/SLIT-drops) achieved in Europe. The sales growth in 2024 in Europe is influenced by a number of extraordinary factors, including a high number of new patients starting treatment over the past year, improved pricing and rebate adjustments as well as certain competitive dynamics in key markets.
- Revenue is now expected to grow by 14-16% organically in local currencies (previously: 12-15%) on broad-based growth across sales regions and product groups. European tablet sales remain key to growth.
- The EBIT margin is now expected to improve to 19-21% (previously: 18-20%) (up from 14% last year) mainly driven by the higher sales growth. One-off costs of DKK ~60 million related to optimisation efforts are included in the guidance.
The outlook is based on the following assumptions:
Revenue
Europe is expected to deliver robust, double-digit revenue growth, while mid to high single-digit growth is projected in North America and International markets.
European tablet sales are expected to be the main growth driver. Growth in European tablet sales is expected at a level significantly above the growth in 2023, driven by an increased inflow of new patients and improved pricing. Growth will be supported by expansion of patient and prescriber bases, market share gains and the shift towards evidence-based medicine in key markets. Tablet sales in North America and International markets are expected to grow, albeit at lower rates than in 2023. Growth in North America is expected to slow down in H2 2024 as a consequence of a lower impact from recent improvements to the average selling prices in the USA. Growth in Japan will continue to reflect intermittent capacity limitations at ALK’s partner, despite recent improvements of yields in the production of active ingredients (ref. to page 4).
Fluctuations in quarterly tablet sales are expected, primarily reflecting the timing of product shipments to Japan.
Combined sales of SCIT/SLIT-drops are projected to grow by high single-digits, driven by both higher SCIT sales and improved SLIT-drops sales in Europe. Modest growth is anticipated for North American SCIT-sales.
Sales of other products are expected to grow by mid to high single digits, driven by the normalization of market supply of the adrenaline autoinjector Jext®. Sales of other products in North America are assumed to be flattish following continued market volatility.
Margin
The gross margin is expected to increase by around 1 percentage point. The margin will benefit from changes to the sales mix, improved pricing and efficiencies. These factors will be somewhat offset by inflationary pressures in product supply.
Capacity costs
The capacity cost-to-revenue ratio is expected to further improve as ALK capitalises on existing platforms to enhance efficiencies, reduces R&D spend and implements optimisation measures. R&D expenses are still projected to decline to around 10% of the expected revenue, while single digit increases are assumed for both sales and marketing expenses and administrative costs.
Around DKK 60 million in one-off costs associated with optimisation initiatives are factored into the guidance.
Other assumptions
- The European AIT markets are generally expected to be stable. Exceptions include the reversal of last year’s mandatory rebate increase in Germany and the possibility of minor adjustments in select Southern European markets.
- Respiratory infection waves across markets are not assumed to materially affect capacity at allergy clinics or patient behaviour, nor are they likely to impact ALK’s activities.
- Changes in consumers’ spending power are not expected to materially affect demand for AIT.
- When excluding the acquisition of PRE-PEN®, free cash flow is projected to increase. CAPEX investments are projected at around DKK 400 million, and ALK plans to continuously build up inventories in support of revenue growth.
- The outlook does not include any revenue from new acquisitions, new partnerships or in-licensing of products and services, nor does it include payments in relation to M&A or in-licensing.
- The outlook is based on current exchange rates, resulting, resulting in an immaterial currency effect on reported growth in revenue and a minor negative effect on reported growth in EBIT.
Outlook from upgrade on 21 June 2024
ALK (ALKB:DC / OMX: ALK B / AKBLF) today announced that the full-year financial outlook has been upgraded to reflect better than expected sales performance in Q2 and an improved outlook for the remainder of the year.
- Revenue is now expected to grow by 12-15% in local currencies (prev.: 10-13%).
- The EBIT margin is now expected to improve to 18-20% (prev.: 17-19%) vs. 14% in 2023.
The full-year revenue outlook has been upgraded primarily to reflect a continued strong momentum in tablet sales, improved performance for injection- and drop-based allergy immunotherapy products (SCIT/SLIT-drops) as well as an improved pricing outlook in parts of Europe.
The full-year earnings upgrade is driven by the higher sales growth and continued operational leverage. The earnings outlook still includes one-off costs of approximately DKK 60 million related to optimisation efforts as previously communicated. Furthermore, the recent news regarding China (ref Company Announcement 13/2024) does not impact this updated outlook.
Latest outlook from three-month interim report (Q1) 2024 released on 2 May 2024
OUTLOOK FOR 2024
With reference to Company Announcement no 10/2024, the full-year financial outlook has been upgraded mainly to reflect the recent development in European tablet sales:
- Revenue is now expected to grow by 10-13% (previously: 9-12%) organically in local currencies on broad-based growth across sales regions and product groups. European tablet sales remain key to growth.
- The EBIT margin is still expected to improve to 17-19% (up from 14% last year) on sales growth, efficiencies, and lower R&D costs. One-off costs of DKK ~60 million to optimisation efforts are now included in this guidance.
The outlook is based on the following assumptions:
Revenue
Tablet sales are expected to grow by double digits, fuelled by expansion of patient and prescriber bases, market share gains and the shift towards evidence-based medicine in key markets. European tablet sales growth is set to rebound to a level significantly above the growth in 2023, driven by an increased inflow of new patients and improved pricing. Tablet sales in North America and International markets are expected to see continued growth. However, growth from Japan is still expected to be somewhat lower than in 2023, mainly attributable to intermittent capacity limitations at ALK’s partner. Some fluctuations in quarterly sales are expected, primarily influenced by the timing of product supply to Japan.
Combined sales of SCIT/SLIT-drops are still expected to see growth, led by SCIT, although at a lower rate compared to 2023, which was influenced by improved pricing in Europe. Full-year growth is now expected to be attributed mainly to higher sales in Europe whereas sales in North America and International markets will be lower than previously anticipated.
As supply of Jext® normalizes, sales of other products are still expected to see growth, although at a lower level than previously assumed, mainly due to the recent development in the sales of other products in North America.
Margins
The gross margin is expected to be slightly above that for 2023. The margin will benefit from increased sales volumes, enhanced efficiencies, and the reversal of the German rebate adjustment. These positive factors will be somewhat offset by inflationary pressures in product supply.
Capacity costs
The capacity cost-to-revenue ratio is still expected to further improve as ALK capitalises on existing platforms to enhance efficiencies and reduces R&D expenditure as well as implements optimisation measures identified during the strategy review. R&D expenses are still projected to decline to around 10% of the expected revenue. Sales and marketing expenses are expected to see single digit increases, while administrative expenses are expected to see a slight decline when excluding one-off costs associated with the ongoing strategy review.
The approximately DKK 60 million in one-off costs associated with optimisation initiatives, cf. page 4, are factored into the guidance.
Other assumptions
- The European AIT markets are generally expected to be stable. Exceptions include the reversal of last year’s mandatory rebate increase in Germany and the possibility of minor adjustments in select Southern European markets.
- Respiratory infection waves across markets are not assumed to materially affect capacity at allergy clinics or patient behaviour, nor are they likely to impact ALK’s activities.
- Changes in consumers’ spending power are not expected to materially affect demand for AIT.
- When excluding the acquisition of PRE-PEN®, free cash flow is projected to increase. CAPEX investments are projected at around DKK 400 million, and ALK expects to continuously build up inventories in support of revenue growth.
- The outlook does not include any revenue from acquisitions, new partnerships or in-licensing of products and services, nor does it include payments in relation to M&A or in-licensing.
- The outlook is based on current exchange rates, resulting, resulting in an immaterial currency effect on reported growth in revenue and EBIT.
Original outlook from annual report 2023 released on 8 February 2024
OUTLOOK FOR 2024
ALK expects to continue its trajectory of organic growth and earnings improvement in 2024.
(Revenue growth rates are stated as organic growth in local currencies, unless otherwise indicated)
ALK expects broad-based growth across sales regions and product groups in 2024. Revenue is projected to grow by 9-12% in local currencies.
Tablets continue to be key in driving growth. Global tablet sales are expected to show a double-digit increase. This growth is fuelled by the expansion of both patient and prescriber bases, gains in market share, and the favourable shift towards evidence-based medicines in key markets. Consistent with past trends, some fluctuations in quarterly tablet sales are expected, primarily influenced by the timing of product supply to ALK’s partner in Japan.
Growth in European tablet sales is set to rebound to a level well above the growth in 2023, driven by an increased inflow of new patients in the recent initiation season. Similarly, North America and International markets are expected to see continued sales growth for tablets. However, the anticipated growth in revenue from Japan is expected to be somewhat lower than in 2023, mainly attributable to certain intermittent capacity limitations in our partner’s manufacturing of the active ingredient for the cedar tablet.
The combined sales of SCIT/SLIT-drops are projected to see continued growth. This growth will primarily be driven by SCIT across regions, although at a somewhat lower rate compared to the notable growth seen in 2023, which was influenced by improved pricing and extraordinary rebate adjustments in Europe. Conversely, sales of SLIT-drops are expected to show a slight decline because of the ongoing market transition in France. Sales of Other products and services are expected to resume growth, particularly as the supply of Jext® normalises.
Improved EBIT margin
ALK expects the operating profit to further improve in 2024, driven by revenue growth, benefits of scale, and a significant reduction in external costs for clinical trials. The EBIT margin is expected to be 17-19% against 14% in 2023, corresponding to a 20-35% improvement in the EBIT margin.
The gross margin is expected to be on a par with or slightly above that for 2023. The gross margin will benefit from increased sales volumes, enhanced efficiencies in product supply, and the reversal of mandatory rebate adjustments in Germany. These positive factors will be somewhat counteracted by inflationary pressures on the cost base in ALK's product supply. The capacity cost-to-revenue ratio is expected to see further improvements as ALK capitalises on existing platforms to enhance efficiencies and reduces R&D expenditure. R&D expenses are expected to decline to around 10% of the expected revenue. This reduction reflects the completion of two large-scale clinical Phase 3 programmes for tablets in 2023, enabling ALK to progressively reallocate resources to areas such as food allergies and other innovations. Sales and marketing expenses are expected to see single digits increases, fuelled by investments in the growth of European tablet sales and including preparations for the planned paediatric tablet launches and the organisational build-up in China. Administrative expenses are expected to see a slight decline from 2023, where there were extraordinary costs related to management changes.
Throughout the year, particular attention will be given to optimisation and prioritisation initiatives, enabling ALK to strategically allocate resources to fund future growth initiatives.
2024 targets
Revenue growth: 9-12% (up from DKKm 4,824 in 2023)
Higher EBIT margin: 17-19% (up from 14% in 2023)
Key assumptions
- The European AIT markets are generally expected to be stable. Exceptions include the reversal of the 2023 mandatory rebate increase in Germany and the possibility of minor adjustments in selected Southern European markets.
- The current waves of respiratory infection across ALK's markets are not expected to materially affect capacity at allergy clinics or patient behaviour, nor are they likely to impact ALK’s clinical and commercial activities, sales, and investments.
- Changes in consumers’ spending power, amid higher living costs and challenging macroeconomic conditions in some markets, are not expected to materially affect demand for AIT, as the majority of ALK’s sales involve products with insignificant co-payments (if any) by patients.
- When excluding the effect of the recent acquisition, free cash flow is projected to increase, driven by higher earnings. CAPEX investments are projected at around DKK 400 million, and ALK expects to see a continued inventory build-up in support of revenue growth.
- The outlook does not include potential one-off costs associated with optimisation and prioritisation initiatives. Furthermore, the outlook is based on ALK’s current portfolio and does not include revenue from new acquisitions, new partnerships, or in-licensing of products, nor does it include payments related to M&A or in-licensing activities.
- The outlook is based on current exchange rates, resulting in an immaterial currency effect on reported revenue and EBIT.
Forward-looking statements
This report contains forward-looking statements, including forecasts of future revenue, operating profit, and cash flows as well as expected business-related events. Such statements are, by their very nature, subject to risks and uncertainties, as various factors, some of which are beyond the control of ALK, may cause actual results and performance to differ materially from the forecasts made. Without being exhaustive, such factors include consequences of COVID and other pandemics, general economic and business-related conditions including: legal issues, uncertainty relating to demand, pricing, reimbursement rules, partners’ plans and forecasts, fluctuations in exchange rates, competitive factors and reliance on suppliers. Additional factors include the risks associated with the sourcing and manufacturing of ALK’s products, as well as the potential for side effects from the use of ALK’s products, as allergy immunotherapy may be associated with allergic reactions of differing extents, durations, and severities.
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