Sartorius AG (Germany) - Group sales revenue up 5.2%; order intake up 7.7%; underlying EBITDA up 6.3% | High growth dynamics for Bioprocess Solutions; uneven market environment for Lab Products & Services | Earnings target for the full year of 2013 confirmed
Sartorius, a leading international laboratory and pharmaceutical equipment provider, closed the first nine months of 2013 with substantial gains in order intake, sales revenue and earnings. At the same time, the three Group divisions reported different levels of dynamics. Bioprocess Solutions, the largest division that primarily specializes in single-use products for pharmaceutical drug manufacture, performed especially well yet again. Business for the divisions of Lab Products & Services and Industrial Weighing also picked up during the first nine months, yet third-quarter development of lab business remained below expectations due to a difficult market environment in some areas. Based on the Group's nine-month figures, management confirmed its full-year earnings target.
Growth in Sales Revenue and Order Intake:
Sartorius increased its order intake in the first nine months of 2013 by 7.7% in constant currencies (cc) to 669.9 million euros (reported: 5.2%; 9-mo. 2012: 636.6 million euros). In the same period, sales revenue in cc rose 5.2% to 657.3 million euros (reported: 2.8%; 9-mo. 2012: 639.4 million euros).
The Bioprocess Solutions Division primarily contributed to the Group's strong business performance. Order intake for this division in cc rose sharply by 15.9% to 404.9 million euros (reported: 13.5%; 9-mo. 2012: 356.6 million euros). This increase was driven by strong demand for single-use products utilized in biopharmaceutical manufacture as well as by special growth impulses from large equipment orders primarily in the first quarter. The division's sales revenue in cc also rose significantly by 8.4% to 382.4 million euros (reported: +6.1%; 9-mo. 2012: 360.3 million euros). The acquisition that closed in January 2013 in the field of cell culture media contributed approximately one percentage point to revenue expansion. Regionally, the Bioprocess Division reported the highest growth in Asia.
For the Lab Products & Services Division, order intake at 191.4 million euros remained below the prior-year figure (cc: -3.6%; reported: -6.1%; 9-mo. 2012: 203.9 million euros). This was due to the sluggish recovery of the market environment in North America and Asia and to adjustments in the division's product portfolio. Without the phase-out of a few non-strategic product lines, the division's order intake in cc would have been approximately at the previous year's level. While the North American and Asian regions for Lab Products & Services developed less dynamically than expected, its European business development was robust. At 199.1 million euros, the division's revenue for the first nine months was at the year-earlier level (cc: +0.9%; reported: -1.7%; 9-mo. 2012: 202.5 million euros).
After starting off in a challenging market environment at the beginning of the year, Industrial Weighing, the smallest Group division, continued to show positive performance. Thus, its order intake and sales revenue at 73.6 million euros and 75.8 million euros, respectively, roughly attained the prior-year levels (order intake in cc: -0.5%; reported: -3.2%; 9-mo. 2012: 76.1 million euros. Revenue in cc: +1.5%; reported: -1.1%; 9-mo. 2012: 76.7 million euros).
From a regional perspective, Sartorius recorded the highest sales growth in Asia, at 8.0% in cc, followed by Europe, which gained 6.6% in cc. Sales revenue in cc for North America was slightly down 1.8% from its exceptionally strong year-earlier base. However, order intake for this region also climbed significantly.
Further Increase in Profit:
In the first nine months of 2013, the Sartorius Group further expanded its profitability. Its underlying EBITDA1) increased overproportionately by 6.3% to 126.0 million euros, and its respective margin rose from 18.5% to 19.2%. Driven by economies of scale, earnings contributed by the Bioprocess Solutions Division increased 12.4% to 86.8 million euros. The division's underlying EBITDA margin rose significantly from 21.4% to 22.7%. At 32.4 million euros, underlying EBITDA for the Lab Products & Services Division approximately reached the year-earlier level of 33.1 million euros at an unchanged margin of 16.3%. Earnings for the Industrial Weighing Division were at 6.7 million euros, down from the year-earlier figure. Its underlying EBITDA margin was 8.9% relative to 10.6% in the comparable period.
Including extraordinary items of -4.8 million euros (9-mo. 2012: -9.7 million euros), depreciation and amortization, Group EBIT rose year over year from 79.3 million euros to 86.3 million euros. The respective EBIT margin was at 13.1% relative to 12.4% a year ago. Relevant net profit2) of 47.0 million euros for the Group remained nearly unchanged from the prior-year period (9-mo. 2012: 46.8 million euros). Earnings per ordinary share were at 2.75 euros, up from 2.74 euros a year ago; earnings per preference share at 2.77 euros were also up, from 2.76 euros in the year before.
Full-year Earnings Forecast Confirmed:
Based on the Group's business performance in the first nine months, management confirmed its earnings forecast for the current year. This forecast projects an increase in the Group's underlying EBITDA margin to around 19.5% based on constant currencies (cc). Consolidated sales revenue is expected to increase approx. 7% in constant currencies, within the growth corridor of 6% to 9% communicated at the beginning of the year, but not quite reach the upper half of this corridor as forecasted at mid-year.
In view of the three divisions, the company continues to anticipate that Bioprocess Solutions will reach, or slightly exceed, the upper end of the range of 9% to 12% in sales growth. The division's underlying EBITDA margin is projected to rise to 22.5% to 23.0% (unchanged guidance).
Due to the uneven market environment for Lab Products & Services, the company now forecasts that this division will reach its previous year's sales level (former guidance: lower limit of the growth corridor of 3% to 6%). The division's underlying EBITDA margin for fiscal 2013 is expected to be at around 16.0% (former guidance: 17.0% to 17.5%).
For the Industrial Weighing Division, revenue guidance remains unchanged: its sales in constant currencies are projected to attain the lower end of the growth range of 0% to 3%. Its underlying EBITDA margin is expected to attain around 10.0% (unchanged guidance).
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