[News Space=Reporter seungwon lee] On the 18th, Celltrion announced the 'Value Up Program (corporate value enhancement plan)' with the aim of increasing corporate value and maximizing shareholder returns in the mid- to long-term.

Amid the ongoing undervaluation of domestic listed companies, Celltrion has established this program to inform the market of clear growth goals and to present a strong will and plan for shareholder returns. The Value-Up Program is structured around the following goals by 2027: ▲Sales growth (annual average sales growth of 30% or more) ▲Profitability improvement (Return on equity: ROE of 7% or more) ▲Shareholder return (Achieve an average shareholder return rate of 40% over 3 years).

▲ Achieve KRW 5 trillion in sales by 2025… Annual average growth of more than 30% until 2027

As previously announced, sales are expected to reach the target of 5 trillion won this year and the company has set a blueprint for an average annual growth of more than 30% until 2027. It plans to accelerate sales growth through stable growth of existing products and rapid market stabilization of new products.

In fact, Celltrion achieved its highest-ever consolidated sales of KRW 3.5573 trillion last year, as existing products such as Remsima and Truxima showed stable growth, while the sales proportion of new products (Young portfolio) such as Remsima SC (US brand name Zimpentra) and Uplyma increased from 26.1% to 38.4%.

As the number of approved products has been rapidly increasing recently, sales growth is also expected to be evident starting this year. The number of products has increased from the existing six to 11 with the recent addition of five, and the plan is to expand the number of products to 22 by 2030. The target global market size is also expected to increase from KRW 138 trillion this year to KRW 261 trillion in 2030 with the expansion of products.

In addition, the improved cost competitiveness after the merger has expanded the market available for entry, and the increase in commercialized products has enabled the use of bundling strategies, which are also factors in the expected increase in sales. In addition, the company is rapidly increasing its market share by establishing a direct sales system and conducting flexible local supply.

▲ Improvement of cost of sales ratio… Targeting ROE of 7% or higher by 2027 through increased profitability

The profitability improvement effect is also expected to be in full swing starting this year. The cost of sales ratio (hereinafter referred to as the cost ratio) is expected to decrease rapidly due to ▲ clearing of high-cost inventory ▲ productivity improvement ▲ expansion of production at the third plant ▲ termination of amortization of existing product development costs, etc. In fact, the cost ratio, which was close to 63% right before the merger with Celltrion Healthcare at the end of 2023, decreased to 45% in just one year, and is expected to enter the 20% range based on the quarterly results at the end of this year. The plan is to continuously lower the cost ratio thereafter and achieve an improved cost ratio of 20% on average per year by 2027.

In addition, a large-scale write-off of over KRW 110 billion related to the global rights previously held by Celltrion Healthcare was completed last year, and the effect of profit leverage through external growth is expected to become apparent starting this year, so a significant increase in profits is expected. Ultimately, the goal is to improve profitability and raise the return on equity from last year's 2.4% to over 7%.

▲ Purchasing and burning treasury stocks in parallel… Targeting an average shareholder return rate of 40%, “We will further increase shareholder return policies”

Celltrion is also significantly strengthening its shareholder return plan for mutual growth. This is to actively fulfill its promise to shareholders to “consider and practice enhancing shareholder value as top priority.”

First, we plan to actively pursue shareholder returns through dividends, share repurchases and burns, and implement additional shareholder returns, such as tax-free dividends, to achieve an average shareholder return rate [1] of 40% of consolidated net income for three years from this year to 2027. In the mid- to long-term, we also plan to gradually increase cash dividends, targeting 30% of earnings (operating profit before depreciation and amortization - capital expenditures, EBITDA - CAPEX).

Celltrion has already been boldly purchasing and burning its own shares as part of its shareholder-friendly policy. Last year, it completed the acquisition of about 436 billion won worth of its own shares and the burning of over 700 billion won worth of its own shares. In addition, in December of last year, it promoted the burning of about 553.3 billion won worth of its own shares, which was 25% of the total number of shares held at the time, in accordance with the board of directors’ decision, and completed the burning in January of this year.

In addition, on the 14th of this month, the company decided to burn all of its own shares worth approximately KRW 203.3 billion that it had acquired or is currently purchasing on the market since January of this year, including approximately KRW 100 billion worth of its own shares that it had decided to acquire in February, thereby continuing its shareholder-friendly policy.

In addition, a simultaneous dividend of 750 won in cash and 0.05 shares per common share will be paid after the resolution of the regular shareholders' meeting. The total dividend is expected to be 153.8 billion won, which is about 1.5 times higher than the previous year, and the dividend shares will be about 10.25 million shares. In addition, the 'Approval of Capital Reserve Reduction' will be put on the agenda of the shareholders' meeting, and a tax-free dividend resource of about 620 billion won, which will have a high effect of increasing dividend income, will be secured and used for future shareholder dividends.

A Celltrion official said, “Last year, we announced the value-up project to present the company’s vision and further maximize shareholder returns amid the record-breaking sales, successful market stabilization of new products, and smooth portfolio expansion.” The official added, “We will accelerate our ‘leap forward to become a global big pharma’ by growing together with investors through solid corporate value establishment and top-notch shareholder return policies.”