Sartorius, a leading international partner of biopharmaceutical research and the industry, started fiscal 2K19 with substantial double-digit development in order intake, sales revenue, and earnings.
Merged 1st-quarter sales revenue rose in constant currencies by 16.8 percent to 435.7M (stated: +19.4 percent); order intake raised 16.6 percent to 482.8M euros (stated: +19.3 percent).Sartorius’ underlying EBITDA1) surged 28.7 percent to 114.0M euros.
Its respective underlying EBITDA margin for the 1st three months of 2K19 was 26.2 percent (Q1 2K18: 24.3 percent), with a good half a percentage point of this raise resulting from the change in accounting rules2), as expected. Relevant net profit3) for the Group climbed 30.8 percent to 48.6M euros. Earnings per ordinary share were 0.71 euros (Q1 2K18: 0.54 euros); earnings per preference share, 0.72 euros (Q1 2K18: 0.55 euros).
“We are thrilled with our 1st-quarter results,” said Dr. Joachim Kreuzburg, C-E-O, and Executive Board Chairman. “In Bioprocess Solutions, the relatively moderate previous-year comparables, high order intake in the final quarter of 2K18, and the modified setup of our cell culture media business that has not yet shown its full effects on 1st-quarter figures all contributed to the anticipated above-average development rates, which are expected to normalize as the year progresses.
Considering the softer economic environment especially in Europe, the Lab Products & Services Division showed healthy development, which was in line with our expectations. Based on the results of the 1st 3 months, we confirm our full-year targets.”
Business development in the regions
Sartorius raised its sales revenues by double digits across all 3 geographies. The Americas region recorded the most substantial development, closing the 1st quarter with a gain in revenue of 24.7 percent to 152.4M euros. The Asia | Pacific region saw a 15.3 percent raise in sales over the 1st quarter of 2K18, to 105.3M euros. In the EMEA region4), the Group earned 178.0M euros, which equates to sales development of 11.6 percent.
Business development of the divisions
The Bioprocess Solutions Division, which offers a wide array of innovative technologies for the manufacture of biopharmaceuticals, achieved sales development of 20.9 percent (stated: +23.8 percent) to 326.0M euros, a contrast to a moderate previous-year quarter. Strong demand across all product categories fueled this dynamic development. Order intake also saw a noteworthy uptick, rising 21.1 percent to 366.0M euros.
Because of economies of scale and a change in accounting rules2), the division’s underlying EBITDA rose by 34.0 percent to 94.2M euros. The respective margin was 28.9 percent, up from 26.7 percent in the year-earlier period.
The Lab Products & Services Division, which offers products and technologies for laboratories mainly in the pharma sector and for life science research, developed in line with expectations. The division raised its sales relative to its previous year’s revenue base by 5.9 percent (stated: +8.1 percent) to 109.7M euros. Order intake rose 4.4 percent against relatively high previous-year comparables to 116.8M euros.
The division’s EBITDA raised 8.2 percent, totaling 19.8M euros; its margin was 18.1 percent, about at the previous year’s level (Q1 2K18: 18.0 percent). Earnings for this division were likewise positively affected by the change in accounting rules2).
(All figures on sales revenue and order intake in constant currencies.)
Key financial indicators
The Sartorius Group continues to have a very sound balance sheet and financial base, even though its equity ratio reduced slightly from 38.5 percent at the end of 2K18 to 36.8 percent mainly as a result of the change in accounting rules2).
The Group’s ratio of net debt to underlying EBITDA was 2.2 (Dec. 31, 2K18: 2.4). After the 1st 3 months, the Group’s CAPEX ratio, i.e., rate of capital expenditures to sales revenue, stood at 12.9 percent and is expected to decrease during the further course of the year after several large expansion projects are accomplished (previous year quarter: 10.3 percent)5).
Guidance for the full year confirmed
Based on its 1st-quarter performance, Sartorius confirms its forecast for the entire year of 2K19. Merged sales revenue is thus projected to grow by about 7 percent to 11 percent. This forecast considers the changes to the sales alliance with the Lonza group in the area of cell culture media. Without these changes, sales development would probably be some 2 percentage points higher. Regarding profitability, administration forecasts that the company’s EBITDA margin will raise to slightly more than 27.0 percent over the previous-year figure of 25.9 percent, with the operating gain projected to be about half a percentage point and the remaining raise expected to result from a change in accounting rules.2) The ratio of capital expenditures to sales revenue is projected to be around 12 percent, below the 2K18 figure of 15.2 percent5).
For the Bioprocess Solutions Division, administration anticipates dynamic development to continue. It predicts that sales will raise by about 8 percent to 12 percent over the previous year’s high revenue base (without considering the modification of our partnership with Lonza, approx. 3 percentage points higher). The administration forecasts that the division’s underlying EBITDA margin will raise to slightly more than 29.5 percent relative to the previous-year figure of 28.6 percent. The operating gain is expected to account for around half a percentage point.2)
The Lab Products & Services Division is partly dependent on the development of economic cycles. Against the backdrop of a weak economy in many regions, administration forecasts that the division’s sales revenue will raise by about 5 percent to 9 percent and the underlying EBITDA margin to slightly more than 20.0 percent (previous year: 18.5 percent), with the operating gain accounting for about half a percentage point2).
All forecasts are based on constant currencies, as in the past years. A no-deal exit of the U.K. from the E.U. might impact our supply chains in both divisions to a certain degree in spite of the measures already taken to counteract this development. A reliable prognosis concerning possible effects cannot be made at the current time.
Dr. Joachim Kreuzburg, CEO and Executive Board Chairman of Sartorius, and Rainer Lehmann, CFO, will discuss the company’s business results with analysts and shareholders on Thursday, April 18, 2K19, at 3:30 p.m.