Positive earnings surprise revealed under Biohit revenue guidance downgrade

Translation: Original published in Finnish on 12/20/2024 at 7:16 am EET.

The downgrade of Biohit's  revenue guidance was not particularly dramatic compared to expectations, as it appears to be mainly due to the postponement of deliveries for the rest of the year to next year. At the same time, relative profitability in 2024 is well above our expectations, and EBIT even at the lower end of the new guidance range is above our current forecast. Thus, a positive performance surprise for the current year was revealed under the lowered guidance. Profitability has seen some ups and downs, so the sustainability of H2's excellent performance is still uncertain. We will update our Biohit forecasts in the near future.

Revenue growth slower than expected, but profitability remains strong

On Thursday, Biohit lowered its revenue guidance for 2024. The company's December revenue is lower than forecast due to the tightening situation in the Middle East. The company is delaying shipments to the region due to payment delays. The guidance downgrade at the very end of the year may indicate that the company was on track to meet its revenue targets, but a single delivery delay led to a last-minute profit warning.
 We estimate that the majority of the deferred revenue will be recognized in H1'25.

According to Biohit's new guidance, 2024 revenue will be 14.1-14.4 MEUR (previous 15.1-15.7 MEUR) and operating profit percentage 16-18% (previously at least 10%). Our forecast for this year was for revenue of 15.1 MEUR and EBIT of 2.0 MEUR (13.3% of revenue).
 With the new guidance, EBIT for 2024 will be around 2.26-2.59 million, which is well above our current expectations.

Profitability fluctuations

A possible reason for the strong profitability at the end of the year could be the significant increase in the share of revenue accounted for by high-cost in-house production, for example due to individual large orders. However, there is no certainty at this stage. Biohit's profitability in the beginning of the year was clearly down year-on-year, but by the end of the year it was well above the comparison period. In H1'24, profitability was negatively impacted by the increased share of OEM sales at the expense of own production sales. We estimate that the situation may have reversed towards the end of the year. We believe it is too early to conclude that profitability will be permanently higher, and we may see more ups and downs in the future. Further information on the reasons for this result will be available at the latest at the time of the annual financial statements.