Sartorius AG (Germany) - Strong growth in the Bioprocess Solutions Division; positive development trends for Lab Products & Services and Industrial Technologies | Group forecast for the full year confirmed; guidance for the divisions updated.
Sartorius, a leading international laboratory and pharmaceutical equipment supplier, successfully closed the first half of 2014 with significant gains. Consolidated order intake grew 8.9% in constant currencies; Group sales revenue rose 7.8%. Operating Profit1) for the Group also climbed 4.8%; its respective margin after six months was 19.1%. Based on these solid first-half results, Sartorius confirms its Group forecast for the full year of 2014, which projects currency-adjusted growth in sales of 8% to 10% and an increase in its EBITDA margin to approximately 20.0%.
"We are on track in the Group as a whole after six months," commented CEO Joachim Kreuzburg. "Our largest division, Bioprocess Solutions, is operating at the upper end of our expectations, also because our most recent acquisitions are showing excellent development. In the lab division, the phase-out of a few non-strategic product lines had a dampening effect on first-half business as forecasted, and we expect stronger momentum for this division in the second half. Following a weak start into the year, business for the Industrial Technologies Division has noticeably accelerated."
Dynamic Growth of Sales Revenue and Order Intake:
Sartorius increased its order intake in the first half by 8.9% (reported: +6.7%) to 488.6 million euros. Sales revenue also grew significantly at 7.8% (reported: +5.7%), attaining 466.3 million euros compared with 441.3 million euros in the year-earlier period. In view of the divisions, Bioprocess Solutions continued to show high growth momentum. Order intake for this division rose, despite the high comparative base resulting from the strong first half in 2013, by 11.5% (reported: +9.4%) to 304.9 million euros. The division's sales revenue climbed 15.8% (reported: +13.7%) and was 291.1 million euros. In addition to strong business with single-use products, the most recent acquisitions in cell culture media and mini-bioreactors primarily contributed to these gains.
For the Lab Products & Services Division, order intake rose 4.0% (reported: +1.4%) to 132.3 million euros. At 128.5 million euros, sales revenue for the division was still slightly below the prior-year figure (-2.7%; reported: -5.1%). As projected, the phase-out of a few non-strategic products impacted sales; moreover, the market environment, particularly in Asia, proved to be softer than expected.
Following a weak start into the year, business for the smallest Group division, Industrial Technologies, noticeably picked up in the second quarter. Order intake thus rose 6.9% (reported: +4.9%) to 51.4 million euros. At 46.7 million euros, the division's first-half sales revenue in 2014 was still below the year-earlier figure by -4.8% (reported: -6.4%).
Regionally, the strongest growth impulses were again generated by North America, where a gain of 22.4% was recorded and growth contributed by acquisitions played a substantial role. Sales with customers in Asia were up 6.9%, and sales in Europe rose 4.5%. (All regional figures currency-adjusted.)
Further Increase in Consolidated Profit:
Unfavorable foreign exchange rates compared with the previous year slightly dampened the expansion of earnings. Yet the Sartorius Group increased its underlying EBITDA by 4.8% to 88.8 million euros. The corresponding earnings margin was 19.1% and therefore approximately at the prior-year level of 19.2%. Earnings contributed by the Bioprocess Solutions Division climbed 15.1% to 66.9 million euros; its respective margin rose from 22.7% in the year-earlier period to 23.0% as of the reporting date. The Lab Products & Services Division reported an underlying EBITDA of 18.1 million euros relative to 22.7 million euros a year ago and a margin of 14.1%, compared with 16.8% in the previous year. Underlying EBITDA for the Industrial Technologies Division stood at 3.9 million euros relative to 4.0 million euros a year earlier; its respective margin rose year over year from 8.0% to 8.3%.
Group EBIT, including extraordinary items of -3.4 million euros (H1 2013: -3.2 million euros), depreciation and amortization, amounted to 59.6 million euros (+0.8%). The Group's corresponding margin was 12.8% relative to 13.4% a year ago. Relevant net Profit2) for the Group totaled 31.3 million euros (H1 2013: 32.3 million euros). Its respective earnings per ordinary share were 1.82 euros (H1 2013: 1.88 euros), and per preference share, 1.84 euros (H1 2013: 1.90 euros).
Full-year Outlook Confirmed for the Group; Division Guidance Updated:
Based on the results of the first half of 2014, management confirmed its sales and earnings forecast for the Group. Sartorius therefore continues to project that in constant currencies, sales will grow from 8% to 10% and the underlying EBITDA margin will increase year over year from 19.5% to around 20.0% for the full year.
Looking at the three divisions, Sartorius updated its targets announced at the beginning of the year. For Bioprocess Solutions, the company now expects sales growth to reach the upper end of the 12% to 15% range communicated so far. With respect to profitability, the Bioprocess Solutions' underlying EBITDA margin is still forecasted to rise to about 23.5% (previous year: 23.0%). For Lab Products & Services, Sartorius projects that sales revenue will increase at the lower end of its growth corridor of 1% to 4% communicated earlier. The division's underlying EBITDA margin is expected to be around 15.0% (previous guidance: around 16.5%). Industrial Technologies also projects that its sales revenue will attain the lower end of the 1% to 4% growth range and continues to anticipate that its underlying EBITDA margin will increase to around 10.5% forecasted so far, up from 10.1% a year ago. (All forecast figures currency-adjusted)
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