Sartorius AG (Germany) - Double-digit gains in the Bioprocess Solutions Division; positive development of the Lab Products & Services Division; Overproportionate increase in earnings; Positive outlook for the full year confirmed.
Sartorius, a leading international laboratory and pharmaceutical equipment supplier, got off to a successful start in fiscal 2016, with double-digit gains in sales revenue and earnings (1). "We continue to see dynamic growth driven by both divisions and all business regions," commented CEO Dr. Joachim Kreuzburg. "Especially our larger Bioprocess Solutions Division has continued to perform excellently; regionally, business in the Americas has been expanding the most as projected. Based on our first-quarter results, we confirm our ambitious targets that we have set for the full year of 2016.”
Business Development of the Sartorius Group:
Sartorius increased its sales revenue year over year by 17.9% in constant currencies from 258.1 million euros to 301.9 million euros (reported: 17.0%). Sales grew in all business regions, and again were led by the Americas, which reported a gain of 28.4% to 103.6 million euros. In the EMEA (2) and Asia|Pacific regions, Sartorius expanded its business by 13.5% to 139.8 million euros and by 12.3% to 58.6 million euros, respectively (all regional growth rates in constant currencies).
The gain in profit was even stronger than in sales revenue: Underlying EBITDA rose in the first quarter overproportionately again and, at 72.3 million euros, was up by more than a fourth from the prior-year quarter (+25.8%). The respective margin reached 24.0% relative to 22.3% a year ago. Relevant net profit (3) for the Group increased by nearly one third (32.3%) from 22.1 million euros to 29.3 million euros. The corresponding earnings per ordinary share rose to 1.70 euros (Q1 2015: 1.29 euros (4)) and earnings per preference share to 1.72 euros (Q1 2015: 1.31 euros (4)).
At the end of the first quarter, the company's key financial indicators remained at the strong year-end 2015 level: The Group's equity ratio was 44.7% relative to 44.9% for the year ended December 31, 2015, and the ratio of net debt to underlying EBITDA was 1.3 (Dec. 31, 2015: 1.3).
In line with its strong growth, Sartorius is currently investing at an above-average level in the expansion of its capacity: The capex ratio after three months was at 11.1% and thus consistent with expectations communicated at the beginning of the year.
Business Development of the Divisions:
Regarding the two divisions, Bioprocess Solutions, which focuses on single-use products for the manufacture of biopharmaceuticals, again proved to be the growth engine. Within a dynamic market environment, it increased its sales by 22.8% to 226.9 million euros (reported: 22.0%). Gains were driven by all product segments, and demand for single-use solutions was especially high. Besides excellent organic growth, the division's high growth rate was also due to the overproportionate effect of around four percentage points contributed in the first quarter by the consolidation of BioOutsource and Cellca, acquired in April 2015 and in July 2015, respectively, and to the relatively easy prior-year comparables. Underlying EBITDA for Bioprocess Solutions rose overproportionately with respect to sales, by 31.0% to 61.0 million euros. The division's corresponding margin was 26.9% relative to 25.0% a year ago.
For the Lab Products & Services Division, which supplies laboratory instruments and consumables for labs in research and quality assurance, sales revenue increased 5.2% (reported: 4.0%), attaining 75.0 million euros in the first quarter. Above-average demand was reported, especially for consumables such as lab filters. The division achieved an increase of 3.7% in underlying EBITDA, which rose from 11.0 million euros in the prior-year period to 11.4 million euros. Its margin was at the previous year's level, 15.2%.
Forecast for the Full Year Confirmed:
Based on the strong results of the first quarter in 2016, management confirmed its guidance for the full year. Consolidated sales are expected to grow approx. 10% to 14% in constant currencies. The company's underlying EBITDA margin is projected to gain around one percentage point in constant currencies compared with the prior-year figure of 23.6%. Sartorius further plans on maintaining its investments at approximately the previous year's level of around 10% of sales.
In view of the two divisions, management anticipates that sales for Bioprocess Solutions will increase approx. 13% to 17%. This sales figure includes growth of around 1.5 percentage points projected to be contributed by the acquisitions of BioOutsource and Cellca. The division's underlying EBITDA margin is forecasted to gain around one percentage point in constant currencies compared with the prior-year figure of 26.5%.
For the Lab Products & Services Division that partially depends on general economic trends, Sartorius continues to project that assuming an overall stable economic environment, sales will grow approx. 3% to 7% and the division's underlying EBITDA margin will likewise increase by around one percentage point compared with 16.0% a year ago. (All forecasts for the divisions in constant currencies).
(1) Sartorius uses underlying EBITDA (earnings before interest, taxes, depreciation and amortization and adjusted for extraordinary items) as the key profitability indicator.
(2) EMEA = Europe | Middle East | Africa
(3) After non-controlling interest, adjusted for extraordinary items and non-cash amortization, as well as based on the normalized financial result and corresponding tax effects.
(4) Continued operations