GENEART's First Quarter 2010: Net sales increase by about 13% to EUR 4.6M

31-May-2010 - Germany

GENEART AG increased its net sales during the first quarter 2010 by about 13% from EUR 4.0M to EUR 4.6M compared to the previous year's reference period. EBITDA reached EUR 0.5M and thus exceeded the result of the first quarter 2009 by EUR 0.1M. Based on net sales, the EBITDA margin increased during the first three months from 9.8% to 11.7%. EBIT reached EUR 79 thousand during the first quarter (previous year: EUR 9 thousand). The EBIT margin therefore increased from 0.2% to 1.7%. Due to investments in Research & Development and the increase of the automation level over the last two years, production capacities have been expanded and production costs per unit were reduced further. Simultaneously, these investments resulted in higher budgeted depreciation and thus in initially higher fixed costs. Although material costs increased slightly in absolute figures during the first quarter, the cost of material ratio was lowered slightly from 24.0% to 22.0% compared to the previous year's reference period due to several mid-size orders, among other factors. Increased utilization of production capacities resulted in a decrease of the personnel cost ratio by 7.5 percentage points from 55.3% to 47.8% during the reporting period. The ratio for other operating expenses was reduced as well. Approximately 87% of net sales were generated by the segment Custom Gene Synthesis & services during the first quarter, and the remainder by the Downstream Services segment. 57% of total net sales were allocated to Europe, 34% to North America, and 9% to the rest of the world. GENEART continues to follow its long-term growth strategy in 2010. However, budgeting and forecasting for 2010 is impeded by a continually challenging economic environment and the cautious behavior of customers when placing major orders related thereto, as well as short-term purchasing attitudes. Therefore GENEART expects moderate business growth for the first six months of 2010. The economic environment is expected to improve during the second half of the year, and the associated return to higher growth rates. On the earnings side, GENEART pursues further flexibilization of its cost structures and additional reduction of production costs per unit to be able to meet short-term demand fluctuations. Assuming an overall more normal economic situation during the second half of 2010, GENEART expects net sales between EUR 18.5M and 19.5M and EBIT between EUR 0.5M and EUR 0.6M for the current fiscal year.

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