I-Tech AB (publ) (ticker: ITECH) publish the interim report for the second quarter 2023

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Summary of the period
” Strong sales growth boosts confidence ”

Net sales for the second quarter amounted to 32,656 (17,654) kSEK, which corresponds to an increase in sales of 85 (38)%. The operating profit amounted to 7,388 (1,469) kSEK. For the first half year, net sales amounted to 63,413 (32,132) kSEK which corresponds to 97 (18)% growth. The operating profit amounted to 15,735 (1,802) kSEK.

January to June 2023

  • I-Tech increases its turnover in Korea by 147% during first half of the year.
  • An expert panel proposes changed classification of Selektope in EU.
  • I-Tech held its Annual General Meeting (AGM) in May. At the meeting, it was decided to re-elect all representatives of the board with exception of Bjarne Sandberg who declined to be re-elected in advance of the meeting.
  • In conjunction with the AGM, it was decided to approve a long term incentive program for the management and other employees. Due to a significant change in market value, no employee signed up to the program which was consequently terminated.

Significant events after the end of the period

No significant events occurred after the end of the period.

Financial summary

All amounts in TSEK 2023
Net sales 32,656 17,654 63,413 32,132 83,631
Operating result 7,388 1,469 15,735 1,802 12,024
EBITDA 9,396 3,388 19,684 5,638 20,045
Net result 6,993 1,531 13,653 2,042 10,617
Operating cash flow 7,575 3,172 18,736 6,357 20,125
Equity at end of period 129,688 107,459 129,688 107,459 116,035
Cash and cash equivalents at end of period 69,779 40,844 69,779 40,844 52,754

CEO Comments

Our customers continue to show strong confidence in our product, which is clearly reflected in the sales figures for the quarter. The growth and continued strong customer activity proves the need for the product to achieve climate-related goals in an industry challenged to save around 300 million metric tons CO2 by 2050 from current levels.

The turnover for the quarter amounted to 32.7 (17.7) MSEK and the operating profit amounted to 7.4 (1.5) MSEK. A new record level in turnover for a single quarter was achieved and the operating profit was improved compared to the same quarter last year. The profit margin amounted to 23 (8)%. Considering the first half year, the profit margin amounted to 25 (6)% which clearly demonstrates the scalability in the business model. Even if we continue to have tailwinds from exchange rates, the underlying business performs well with a currency adjusted growth in turnover of 79% for the quarter and 85% for the first half year.

The second quarter shows that mainly two dominating paint makers are contributing to the turnover. Both located in Northeast Asia. Our largest customer Chugoku Marine Paints, accounts for 68% of the revenue while the second largest customer stands for 29%. The Korean newbuilding market has been particularly important for both these players during the quarter. Deliveries to this market segment accounted for 50% of total sales during the first six months of the year.

I am happy to see that six of the leading paint makers has been active in ordering material for development projects since we commented on the recommendation from the expert-panel within the re-registration process in EU. This adds to the confidence that our customers have long term faith in our product for the future.

Environmentally driven factors continue to increase pressure for change in the shipping industry. According to Clarkson Research, it´s estimated that 50% of the current tanker, bulk and container fleet would achieve a poor efficiency rating (rating D or E on the CII index). In addition, the implementation of EU-ETS (Emission cap-and-Trade System) is coming closer with full implementation due in 2026 adding cost for emissions to air.

As the business is growing, we are gathering key scientific and legal experts to work with us to confront the statements for the EU expert group, suggesting that the newly introduced ED classification (endocrine disruption) could potentially be implemented on medetomidine (Selektope®). This process will continue over a multiyear time-frame and I-Tech has mobilized support from leading scientists within the field.

There is no doubt about the industry’s general frustration with the EU’s approach to introducing strong driving forces to reduce emissions but at the same time attempt to block the tools required to achieve a lower carbon intense shipping industry. As we continue to push for what we and many others believe is an essential technology to reduce the CO2 footprint, we sail onwards with our ambitious targets to expand the business, increasing our customer base, developing more products and identifying more use areas.

Philip Chaabane
CEO I-Tech