CG MedTech(056090), backed by growth in its core medical device business in the first half of this year, increased standalone sales by more than 35%. However, as stabilization expense for newly consolidated subsidiaries brought in through mergers and acquisitions (M&A) and upfront investments for business expansion were reflected, operating profit on a consolidation basis fell sharply.
CG MedTech said on the 21st that standalone first-half sales were 17.72 billion won, with operating profit of 1.4 billion won. Sales rose 35.1% from the same period a year earlier, and operating profit increased 3.8%. However, as cost of goods sold pressures and expense for business reorganization and building a base for new businesses grew, the increase in operating profit fell short of the sales growth rate.
On a consolidation basis, the picture is different. First-half sales were 28.35 billion won, up 16.3% from a year earlier, but operating profit fell about 77% from 2.5 billion won to 570 million won.
The company said stabilization expense for newly consolidated subsidiaries, upfront investments for business expansion, and the timing of recognizing some order sales affected consolidation profitability. For DM Power, which operates an electric energy business, existing order volume will be reflected in sales sequentially from the second half according to the project schedule.
In the core medical device business, both domestic and overseas sales grew. On a company-managed standalone basis, domestic sales increased 38.3% from a year earlier, and overseas sales rose 31.8%. In Korea, a reorganization of the sales system and expanded sales of spinal implants drove results.
In particular, on a standalone domestic sales basis, the spine product group grew about 50%, the bone graft gel product group about 41%, and the bone substitute "Novosis Trauma" about 94%. The combined growth rate of these three product groups was tallied at about 58%.
CG MedTech also moved to expand production capacity in step with growth. This year it completed a new plant in Uijeongbu and expanded automated metal processing equipment for orthopedic and spinal implants and production infrastructure for three-dimensional (3D) printing products. The investment put into new and expanded buildings and production facilities totaled 12.3 billion won.
The new plant has already begun commercial production, and the company plans to focus in the second half on stabilizing production processes and improving the utilization rate. Whether the expansion of production capacity can lead to the ability to handle large-scale orders and improve medium- to long-term cost competitiveness will be key to future profitability.
CG MedTech is also accelerating expansion into new businesses beyond medical devices. Through the merger of GDS and the acquisitions of Allabutment and Dental Ocean, it is building a digital dentistry value chain that spans from digital design of dental implants to manufacturing of core components.
In the human tissue–based regenerative medicine business, in April it secured a human tissue processing facility and key equipment in Seongnam, and in July it received a change approval for the tissue bank of "REGEN Hub." Based on this, it plans to expand into production of human tissue products based on hECM and into contract development and manufacturing organization (CDMO) business.
The company aims to achieve annual sales of 100 billion won by 2028, using expanded production capacity for spinal and orthopedic medical devices, growth in overseas sales, digital dentistry, and the hECM-based regenerative medicine business as growth pillars.
Chief Executive Yoo Hyun-seung of CG MedTech said, "In the second half, we will raise the utilization rate of the new plant and strengthen the foundation for performance improvement by reflecting sales from existing order volume and improving operational efficiency at newly consolidated subsidiaries."