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    LAB B   MX01LA010006

GENOMMA LAB INTERNACIONAL, S.A.B. DE C.V.

(LAB B)
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Genomma Lab Internacional B de C : Q2 2021 Earnings Release

07/28/2021 | 05:05pm EDT

Q2-2021 Results

HIGHLIGHTS

Q2-2021 Sales increased by

Ps. 229.1 million; +6.3% year-on-year

Ps. 70.5 million year-to-date interest expense decrease

Genomma Lab Internacional Reports

Second Quarter 2021 Results

Mexico City, July 28, 2021 - Genomma Lab Internacional, S.A.B. de C.V. (BMV: LAB B) ("Genomma Lab" or "the Company"), today announced its results for the second quarter ended June 30, 2021. All figures included herein are stated in nominal Mexican pesos and have been prepared in accordance with International Financial Reporting Standards (IFRS).

The following tables provide an abridged Income Statement, in millions of Mexican pesos. The margin for each figure represents its ratio to net sales and the percentage change in the second quarter 2021 as compared with the same period in 2020:

Cash & Equivalents

closed at

Ps. 1.41 billion

as of June 30, 2021

Q2-2021 Net Debt to EBITDA

ratio closed at 1.59x

5,000,000 bottles of Suerox®

produced in-house during June 2021

Capex Investmentsreached

Ps. 318.4 million.

in the six months ended

June 30, 2021

Q2 2021

% Sales

Q2 2020

% Sales

Var. %

Net Sales

3,865.4

100.0%

3,636.3

100.0%

6.3%

Gross Profit

2,351.6

60.8%

2,178.4

59.9%

8.0%

Operating Income

742.0

19.2%

714.9

19.7%

3.8%

EBITDA(1)

776.5

20.1%

754.9

20.8%

2.9%

Net Income

379.2

9.8%

360.8

9.9%

5.1%

  1. EBITDA defined as operating income before depreciation and amortization

Comments from the CEO

Mr. Jorge Luis Brake, Genomma Lab's Chief Executive Officer, commented:

"We continued to deliver consistent growth during the first half of 2021, following Genomma's strong 2020 results, despite the pandemic's ongoing economic and social impact. The second quarter of 2021 was one of the strongest quarters in Genomma's history, and the eleventh consecutive quarter of growth, driven by innovation and the continued implementation of our Four Pillar growth plan. This was characterized by line extensions, product repositioning and brand modernization through new and improved formulas and packaging, and supported by a business model which increases consumers' access to our broad range of products at competitive price points."

He added: "Our strategy drives sustained profitable growth, as we continue to win with the consumer while strengthening efficiencies throughout every aspect of Genomma's business as part of our Continuous Improvement Program. Additionally, we remain focused on strengthening our ESG strategy; delivering high-quality innovative products through sustainable initiatives while we nimbly adapt to evolving consumer demands."

www.genommalab.com/inversionistas/

1

Q2-2021 Results

KEY DATA

  • Sales by Segment: OTC 50.3% PC 49.7%

18 Countries

&

+400,000 POS*

*Points of Sale

Lomecan® Intimo

cleanser

Clinically-provenwith micellar technology

Business Review

Genomma Lab maintained continued robust levels of profitability and sales growth during the second quarter of 2021; the Company's eleventh consecutive quarter delivering solid top-line performance. This was driven by innovation, strong marketing initiatives and successful point of sale execution and brand portfolio expansion also within new categories.

Second quarter 2021 net sales reached Ps. 3.87 billion; a 6.3% year-on-year increase reflecting the Company's resilient and dynamic business model based on its Four Pillar strategy. Adjusted for the second quarter 2020 hand sanitizer non-recurring effect in the U.S., consolidated net sales would have increased by double-digits,year-on-year. These results were offset by a difficult comparison base due to increased pandemic- related 2020 sales as well as FX headwinds in the second quarter 2021 across the main countries where Genomma operates.

EBITDA margin for the quarter closed at 20.1%, a 70bps year-on-year margin contraction primarily attributable to a negative impact from COGS inflation, FX headwinds and a negative portfolio sales mix in certain key countries, including the U.S. which experienced a difficult comparison base due to extraordinary hand sanitizer sales as well as a soft flu season in South America. Second quarter 2021 EBITDA margin was impacted to a lesser extent by non-recurring investments related to Genomma's process of consolidating sourcing to its Industrial Cluster.

The following four-pillar strategy priorities continued to guide Genomma's execution and operation during the quarter:

Product Innovation and Portfolio Optimization

Product innovation is an important growth driver for Genomma. The Company successfully executed key innovation strategies during the second quarter 2021, including new categories such as Novamil® & Groomen® with continued product portfolio optimization including line extensions and new product launches to further strengthen the portfolio. Examples during the quarter included: 1) In Mexico, the Suerox® Aloe Vera-Lychee launch, Sistema GB® relaunch, a new micellar technology cleansing line launched under the Lomecan® brand, as well as a new XL-3® AB antibacterial gel reformulation; 2) In Latin America, the Shot-C® vitamin C ready to drink immune support liquid launched in Chile and Colombia, upgraded Medicasp® sachet presentation for the Andean region, the Liris® brand launch- a new ophthalmic lubrication eye drop category for the Company- in Brazil, the DiabetTX® antiperspirant deodorant specifically designed for individuals with diabetes, launched in Argentina, and 3) a sugar-free Suerox® Coconut Refresh with Zinc launch within the U.S. market.

www.genommalab.com/inversionistas/

2

Q2-2021 Results

Wellness Center endcap in

Chile

Growth initiative ensures

operational excellence

Diversity, inclusion and gender equality policy (See document)

Strengthened Marketing and Perfect Go-To-Market Execution

Genomma expanded its presence within the traditional channel in Mexico, Central America and the Andean region during the quarter. The Company also focused on two key growth projects:

  1. Expansion within the e-commerce channel through attractive Hot Sale campaigns, which increased Genomma's market share.
  2. Strengthening in-store media marketing and communication campaigns for core brands.

During the quarter, the Company also leveraged point of sale endcaps to promote its "Wellness Center" concept to drive synergies among core brands. Genomma continued transforming its core brand advertising campaigns, expanding its product reach within respective markets and promoting environmentally friendly innovations.

World-Class Supply Chain

Genomma's supply chain further drove the Company's transformation during the second quarter through the launch of its GPS (Genomma Production System) to ensure operational excellence at the Company's new Industrial Cluster. The implementation process consists of five phases: planning, start-up, stabilization, optimization and ongoing improvement. GPS will align results, operating principles, systems and tools supported by the Company's corporate culture characterized by delivering growth and optimizing efficiencies.

The isotonic beverage line reached more than 5,000,000 bottles produced during the month of June. Initial production trials began at Genomma's Personal Care manufacturing facility for its shampoo and skin care lines. Production for sale is expected to begin during the third quarter of 2021.

Manufacturing facility investments reached Ps. 318.4 million during the first half of 2021, primarily for equipment, production line installation and establishing Genomma's industrial cluster infrastructure. Pre-operating expenses for new lines during the quarter were approximately Ps. 36.3 million.

Sustainability and Corporate Culture

Genomma was once again selected as a component within the "S&P/BMV Total Mexico ESG Index" for the second consecutive year. The index is comprised of 29 public companies in Mexico recognized for their outstanding ESG practices based on the S&P's Corporate Sustainability Assessment. Genomma also updated its Diversity, Inclusion and Gender Equality Policy, inaugurating its Global Committee for Diversity, Inclusion and Gender Equality during the quarter, with associated action groups. Related to its focus on the environment, Genomma worked with a specialized consultancy to update its climate risk and opportunities analysis to align with the TCFD (Task Force on Climate-RelatedFinancial Disclosures) recommendations.

www.genommalab.com/inversionistas/

3

Q2-2021 Results

Sistema GB®

Relaunch in the

Mexican market

Cicatricure® Gold Lift

New liquid foundation line

with gold peptides

Mexico

Net sales and EBITDA at Genomma's Mexico operations increased by 8.6% and 14.4% year-on-year, respectively, to close at Ps. 1.64 billion with a 20.2% EBITDA margin. Strong results were due to a solid growth strategy execution in Mexico and incremental sales from new categories, such as Novamil® & Groomen®, as well as strong performance at the point of sale which increased market share within key pharmacy chains nationwide and within the traditional channel. This was partially offset by decreased demand within certain portfolio categories, reflecting continued COVID-19 pandemic effects.

U.S.

Net sales at Genomma's U.S. operation decreased by 33.4% with a 650bps decline in EBITDA margin, primarily due to a challenging year-on-year comparison base reflected in atypically strong second quarter 2020 antibacterial hand sanitizer sales and, to a lesser extent, by the lagging effect from a historically low 2021 flu season, as well as FX headwinds due to appreciation of the peso relative to the U.S. dollar, reflected in a corresponding decreased contribution by Genomma's U.S. subsidiary in Mexican pesos. Adjusted for the second quarter 2020 hand sanitizer non-recurring effect, sales in the region would have increased by double-digits,year-on-year. The Company incurred incremental expenses during the quarter related to advertising and in-store media strategies to drive U.S. market share increases. The above was partially offset by an outstanding performance of Suerox® sales and strong performance within the e-commerce channel, a reflection of Genomma's solid e- commerce strategy within this market since the beginning of the pandemic.

Latin America

Latin America net sales reached Ps. 1.90 billion during the second quarter 2021; a 15.7% year-on-year increase. Increased sales were driven by strong execution of new strategies with successful portfolio expansion initiatives. Second quarter 2021 EBITDA margin closed at 22.8%; a 260bps year on year margin decline, primarily due to raw materials and commodity inflation, as well as a negative sales mix and increased operating expenses within the region. Additionally, second quarter 2021 EBITDA margin was adversely impacted by FX headwinds in those key countries where Genomma operates.

www.genommalab.com/inversionistas/

4

Q2-2021 Results

Genomma's New Industrial Cluster

+5,000,000 bottles

of Suerox® produced

during June 2021

Suerox® Aloe-Vera Lychee New flavor produced at new manufacturing cluster

Isotonic Beverage Manufacturing Line

www.genommalab.com/inversionistas/

5

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Genomma Lab International SAB de CV published this content on 28 July 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 July 2021 21:03:22 UTC.


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Financials
Sales 2021 14 781 M 734 M 734 M
Net income 2021 1 645 M 81,7 M 81,7 M
Net Debt 2021 3 658 M 182 M 182 M
P/E ratio 2021 13,2x
Yield 2021 1,39%
Capitalization 20 586 M 1 021 M 1 023 M
EV / Sales 2021 1,64x
EV / Sales 2022 1,44x
Nbr of Employees 1 451
Free-Float 70,9%
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Technical analysis trends GENOMMA LAB INTERNACIONAL, S.A.B. DE C.V.
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Income Statement Evolution
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Mean consensus OUTPERFORM
Number of Analysts 10
Last Close Price 20,44 MXN
Average target price 26,23 MXN
Spread / Average Target 28,3%
EPS Revisions
Managers and Directors
Jorge Luis Brake Valderrama Chief Executive Officer
Antonio Zamora Galland Vice President-Administration & Finance
Rodrigo Alonso Herrera Aspra Chairman
Marco Sparvieri Chief Operating Officer & Executive Vice President
Juan Alonso Independent Director
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