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The UK, USA and Australia accounted for more than a half of Mercator Medical revenues in Q3, 2020

The Mercator Medical Group, a manufacturer of medical gloves and a distributor of single-use medical materials based in…

The Mercator Medical Group, a manufacturer of medical gloves and a distributor of single-use medical materials based in Krakow, reports further record-breaking financial results. In Q3 of the current year, it recorded revenues which are four times higher than a year ago (PLN 604.0 million), with 54% of consolidated sales in the three main Anglo-Saxon markets (UK, USA, Australia). The Group also earned EBITDA which is 46 times higher (PLN 390.9 million) and net result which is 500 times higher (PLN 355.8 million). Net cash increased by more than half a billion PLN compared to last year.

Selected consolidated financial results:

Q1-Q4 2019 Q1 2020 Q2 2020 Q3 2020
million PLN YOY million PLN YOY million PLN YOY million PLN YOY
Revenues 540.3 +29% 202.8 +67% 375.2 +175% 604.0 +317%
EBITDA 24.6 -19% 35.3 +33.5m 234.6 +227.6m 390.9 +382.4m PLN
EBITDA margin 4.6% -2.7 pp 17.4% +15.9 pp 62.5% +57.5 pp 64.7% +58.9 pp
Net result -2.0 -9.3m PLN 20.6 +24.2m 210.5 +209.6m 355.8 +355.1m PLN
Net cash** -133.5 -0.1m -129.8 -13.0m 36.2 +158.5m 380.4 +514.3m PLN

* cash less debt

The demand in the global market of medical and protective single-use gloves associated with the coronavirus is estimated to exceed the possible supply by more than 200 billion units per year, corresponding to more than half of the world’s production capacity. The situation is undoubtedly favourable for manufacturers and distributors of such products. Already in the first half of the year, the Mercator Medical Group multiplied its profits. Q3 2020 brought a further increase in margins – EBITDA profitability was close to 65% (75.0% in the production segment and 54.1% in the distribution segment),and the result at this level increased by 67% compared to the result for Q2. The increase in net profit QOQ growth was similarly high (+69%). Although these are absolutely record-breaking results, the company still sees room for growth.

- In Q3, as expected, glove price increases on the global market slowed down. However, we quickly re-entered the upward path, which means that it will not be until the coming quarters that we will be able to see the pandemic-related quasi-balance in the market and even higher profits for companies in the industry. This is ahead of us, and meanwhile the largest manufacturer of single-use gloves in the world announced an increased waiting period for nitrile gloves in a month by another 40 days, up to 660 days, while before the pandemic it was 30-40 days“”, says Witold Kruszewski, Member of the Management Board for Finance at Mercator Medical S.A.

Importantly, record-breaking results generate cash. Cash flow from operating activity, after three months of the current year, was PLN 543.3 million compared to PLN 37.7 million last year, and at the end of September 2020 - even though all investment loans (PLN 75.6 million) were repaid early – the Group held nearly PLN 384.9 million in cash against 18.8 million PLN last year. This yielded 380.4 net cash compared to PLN 133.9 million of debt at the end of September 2019. As a result, the net debt ratio to EBITDA was negative.

Q3 2020 saw further changes in the geographical sales structure of the Mercator Medical Group. The largest sales market was the UK (PLN 130.8 million, +42% QOQ), followed by Poland (PLN 105.3 million, +11% QOQ) and Australia (PLN 102.3 million, first essential deliveries). Sales to the USA increased by 59% QOQ and reached PLN 93.1 million. Together, the indicated Anglo-Saxon countries and Poland accounted for 72% of consolidated revenues generated in Q3.

We focus on maximising the generated margins, we are an agile organisation, and our advantage is not only efficiency, but also a unique combination of manufacturing and distribution competencies. We are now focusing on markets that ensure our profitability and on accelerated geographic expansion in developed countries. Western Europe, North America as well as Australia and Oceania have already accounted for 65% of sales in total”, says Witold Kruszewski, CFO, Mercator Medical Group.

It is worth noting that after the session on 19 June 2020, securities of Mercator Medical advanced to the mWIG40 index, and since 5 October, the Warsaw Stock Exchange introduced the company’s securities futures to trading. Stock analysts indicate Mercator Medical as a candidate for the Polish WIG20 index and to global indexes (among others the MSCI) in the perspective of subsequent revisions of the indexes. At the same time, since the beginning of the pandemic, this Krakow-based company has been actively involved in the fight against COVID-19 by donating personal protective equipment from its own portfolio to numerous medical and care facilities. To date, Mercator Medical has already donated 1.6 million examination gloves and 50,000 face masks to 55 different institutions, mainly hospitals, nursing homes, hospices and foundations – including the Foundation for the Development of Nursing (Fundacja Rozwoju Pielęgniarstwa), the Saint Dominic Nuns Foundation (Fundacja Sióstr św. Dominika) – as well as to the Police Headquarters, the Material Reserves Agency and the Ministry of Health.

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