Samsung Biologics (207940.KS) has surpassed 1 trillion won in half-year operating profit for the first time on its pure contract development and manufacturing organization (CDMO) business alone. With sales from its Rockville plant in the United States set to be reflected starting in the second half, and Plant 5, which began operations last year, expected to raise its utilization rate as production capacity expands (ramp-up), expectations are growing for the company to achieve its first-ever annual revenue of 5 trillion won.
Samsung Biologics said in a regulatory filing on the 23rd that its first-half revenue rose 28.0% year-on-year to 2.578 trillion won, while operating profit increased 28.6% to 1.1672 trillion won. Compared with the first-half operating profit of the CDMO division (907.4 billion won) before the spin-off of Samsung Bioepis last November, the figure represents a 28.6% increase. On a second-quarter basis, the company posted revenue of 1.3209 trillion won and operating profit of 586.4 billion won.
The improved performance is largely attributed to expanded production capacity as Plants 1 through 4 entered full operation this year. "Based on previously secured orders, all plants are maintaining high utilization rates, sustaining stable revenue growth," a Samsung Biologics official said.
The high exchange rate environment is also cited as a factor supporting earnings. About 95% of revenue is generated in dollars, while costs are largely denominated in won, such as domestic labor expenses. Excluding some items such as imported raw and subsidiary materials, the structure allows a weak won to translate into improved profitability.
Earnings improvement is expected to continue in the second half. Sales from the Rockville production facility in the United States, acquired from GSK last December, will be reflected starting in the third quarter. Plant 5, which began operations last April, is also expected to increase revenue through expanded production capacity as it typically goes through about a two-year process of rising utilization rates and improving efficiency. However, third-quarter revenue is expected to temporarily slow due to the aftermath of the strike conducted last May.
Samsung Biologics expects annual revenue to grow by up to 20% year-on-year this year. Considering last year's annual revenue (4.5569 trillion won), this year's revenue is projected to reach approximately 5.4683 trillion won. Some securities firms have forecast higher earnings. Daishin Securities estimated Samsung Biologics' annual revenue this year at 5.687 trillion won.
