Sartorius starts off fiscal 2019 with a strong first quarter
Sartorius’ underlying EBITDA surged 28.7% to 114.0 million euros. Its respective underlying EBITDA margin for the first three months of 2019 was 26.2% (Q1 2018: 24.3%), with a good half a percentage point of this increase resulting from the change in accounting rules, as expected. Relevant net profit for the Group climbed 30.8% to 48.6 million euros. Earnings per ordinary share were 0.71 euros (Q1 2018: 0.54 euros); earnings per preference share, 0.72 euros (Q1 2018: 0.55 euros).
“We are very pleased with our first-quarter results,” said Dr. Joachim Kreuzburg, CEO and Executive Board Chairman. “In Bioprocess Solutions, the relatively moderate prior-year comparables, high order intake in the final quarter of 2018, and the modified setup of our cell culture media business that has not yet shown its full effects on first-quarter figures all contributed to the anticipated above-average growth rates, which are expected to normalize as the year progresses. Considering the softer economic environment especially in Europe, the Lab Products & Services Division showed robust development, which was in line with our
expectations. Based on the results of the first three months, we confirm our full-year targets.”
Business development in the regions
Sartorius increased its sales revenues by double digits across all three geographies. The Americas region ecorded the strongest growth, closing the first quarter with a gain in revenue of 24.7% to 152.4 million euros. The Asia | Pacific region saw a 15.3% increase in sales over the first quarter of 2018, to 105.3 million euros. In the EMEA region, the Group earned 178.0 million euros, which equates to sales growth of 11.6%.
Business development of the divisions
The Bioprocess Solutions Division, which offers a wide array of innovative technologies for the manufacture of biopharmaceuticals, achieved sales growth of 20.9% (reported: 23.8%) to 326.0 million euros, compared to a moderate prior-year quarter. Strong demand across all product categories fueled this dynamic growth. Order intake also saw a significant uptick, rising 21.1% to 366.0 million euros.
Due to economies of scale and a change in accounting rules, the division’s underlying EBITDA rose by 34.0% to 94.2 million euros. The respective margin was 28.9%, up from 26.7% in the year-earlier period.
The Lab Products & Services Division, which offers products and technologies for laboratories primarily in the pharma sector and for life science research, developed in line with expectations. The division increased its sales relative to its previous year’s revenue base by 5.9% (reported: 8.1%) to 109.7 million euros. Order intake rose 4.4% against relatively high prioryear comparables to 116.8 million euros.
The division’s EBITDA increased 8.2%, totaling 19.8 million euros; its margin was 18.1%, approximately at the previous year’s level (Q1 2018: 18.0%). Earnings for this division were likewise positively affected by the change in accounting rules. (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 decreased slightly from 38.5% at the end of 2018 to 36.8% mainly as a result of the change in accounting rules. The Group’s ratio of net debt to underlying EBITDA was 2.2 (Dec. 31, 2018: 2.4). After the first three months, the Group’s CAPEX ratio, i.e. ratio of capital expenditures to sales revenue, stood at 12.9% and is expected to decrease during the further course of the year after several large expansion projects are completed (previous year quarter: 10.3%).
Guidance for the full year confirmed
Based on its first-quarter performance, Sartorius confirms its forecast for the full year of 2019. Consolidated sales revenue is thus projected to grow by about 7% to 11%. This forecast considers the changes to the sales alliance with the Lonza group in the area of cell culture media. Without these changes, sales growth would probably be some 2 percentage points higher. Regarding profitability, management forecasts that the company's EBITDA margin will increase to slightly more than 27.0% over the prior-year figure of 25.9%, with the operating gain projected to be about half a percentage point and the remaining increase expected to
result from a change in accounting rules. The ratio of capital expenditures to sales revenue is
projected to be around 12%, below the 2018 figure of 15.2%.
For the Bioprocess Solutions Division, management expects dynamic growth to continue. It anticipates that sales will increase by about 8% to 12% over the previous year’s high revenue base (without considering the modification of our partnership with Lonza, approx. 3 percentage points higher). Management forecasts that the division’s underlying EBITDA margin will increase to slightly more than 29.5% relative to the prior-year figure of 28.6%. The operating gain is expected to account for around half a percentage point.
The Lab Products & Services Division is partly dependent on the development of economic cycles. Against the backdrop of a weakened economy in many regions, management forecasts that the division’s sales revenue will increase by about 5% to 9% and the underlying EBITDA margin to slightly more than 20.0% (previous year: 18.5%), with the operating gain accounting for about half a percentage point.
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.
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