Sartorius Stedim Biotech made a cash offer to acquire the UK company TAP Biosystems Group plc (TAP Biosystems) through its wholly owned subsidiary Sartorius Stedim Biotech GmbH. The proposed transaction, which is subject to customary closing conditions, including the approval of TAP’s share ... more
Sartorius Reviews Fiscal 2011 Results
16-03-2012: Sartorius closed the year 2011 with double-digit sales growth and boosted its earnings by nearly a third. At the annual press conference for the company in Goettingen, Germany, Group CEO Dr. Joachim Kreuzburg indicated that 2011 was an especially forward-looking year beyond the company’s financial success. “We slightly readjusted our strategy in 2011, newly focused our division structure and launched important growth initiatives. Moreover, we have begun to substantially invest in our Group infrastructure in order to create capacity to accommodate further growth. Overall, we have considerably reinforced our foundation for the further development of our company and are looking forward with great confidence to the next years.”
For the current fiscal year as well, Sartorius expects positive business development. “We were off to an excellent start in the year and expect to continue on the road to success. We will be aiming at achieving around 10 percent growth in both sales revenue and earnings,“ stated Dr. Kreuzburg. “In 2012, we will be especially focusing on continuing to move forward with our strategic growth initiatives.”
Dynamic Growth of Sales Revenue and Order Intake
In fiscal 2011, Sartorius generated consolidated sales revenue of 733.1 million euros, up from 659.3 million euros a year ago. This equates to an increase of 11.2% (in constant currencies: 12.2%). The gain in order intake reached a similarly strong level: it jumped 10.0% (in constant currencies: 11.0%) to 749.5 million euros.
Both Group divisions contributed to this dynamic top-line performance. Sales revenue for the Biotechnology Division rose by 10.2% (in constant currencies: 11.5%) to 476.9 million euros; order intake, by 13.0% (in constant currencies:14.3%) to 499.8 million euros. Again, business with single-use products for the biopharmaceutical industry drove this growth. Equipment business with biotechnological production systems and instruments also added positive momentum, especially due to the strong demand from Asia. The Mechatronics Division posted a gain of 13.0% (in constant currencies: 13.5%) in sales revenue, which rose to 256.2 million euros, with both businesses for laboratory instruments and industrial weighing and control products expanding at double-digit rates.
The division’s high growth was also buoyed up by the reduction in its year-earlier order backlog and by the strong upswing in the first half. The Mechatronics Division’s increase in order intake of 4.6% (in constant currencies: 5.0%) to 249.7 million euros was accordingly below the rate of sales growth.
Regionally, Sartorius again saw the highest growth rates in Asia|Pacific. There, sales revenue surged on the whole by 23.2%. In Europe as well, the company reported substantial gains, with sales up 10.7%. In North America, Sartorius increased its sales revenue overall by 6.2%, with the Biotechnology Division posting strong gains and the Mechatronics Division only slight increases (all figures currency-adjusted).
Overproportionate Earnings Development
Excellent development of sales revenue was accompanied by overproportionate gains in earnings and in the operating margin. In the reporting period, the Group’s operating EBITA surged 31.2% to 112.2 million euros from 85.5 million euros a year ago. Its respective margin climbed by 2.3 percentage points from 13.0% to 15.3% and thus reached a new high.
Both Group divisions contributed to this positive development of earnings. The Biotechnology Division increased its operating earnings by 18.7% from 70.2 million euros to 83.3 million euros, thus contributing just under 75% to operating earnings for the entire Group. The division’s operating EBITA margin improved from 16.2% to 17.5%. Essentially, the reason for this increase was sales growth induced economies of scale. The Mechatronics Division posted an even higher gain in profit. Reporting an operating EBITA of 28.9 million euros for 2011, this division nearly doubled its earnings from 15.3 million euros reported for the previous fiscal year. The division’s respective margin also rose significantly from 6.8% to 11.3%. This considerable jump in earnings was primarily due to economies of scale and a cost base that was substantially enhanced relative to the previous years.
Extraordinary items stood at -11.3 million euros compared with the previous year’s figure of -6.3 million euros and were predominantly expenses related to acquisitions, measures for optimizing sites and to Group projects. Including these extraordinary items, consolidated EBITA amounted to 100.9 million euros, up from 79.2 million euros a year earlier, and the Group’s respective margin was at 13.8%, up from 12.0% a year ago.
The Group’s relevant net profit surged 32.2% from 39.0 million euros in 2010 to 51.5 million euros in 2011. Corresponding earnings per share are at 3.02 euros, up year on year from 2.29 euros. The unadjusted consolidated net profit after non-controlling interest totaled 41.6 million euros, up from 31.0 million euros a year earlier.
In 2011, net operating cash flow was at 79.0 million euros (previous year: 96.0 million euros) and was used, inter alia, for financing relatively large investments to expand capacity. Net debt of the Sartorius Group rose year on year from 196.9 million euros to 264.8 million euros, primarily due to the acquisition of the Biohit liquid handling business in December 2011. The key debt figure, or the ratio of net debt to underlying EBITDA, was at 1.9 at year-end compared with 1.8 in 2010 and thus continued to remain at a comfortable level. In view of the increase in the balance sheet total, the equity ratio of the Sartorius Group edged slightly downward from 40.5% a year ago to 38.0%.
R&D Expenditures Rose
In fiscal 2011, Sartorius spent 44.3 million euros on research and development, up 3.9% compared to the year-earlier figure of 42.6 million euros. Its ratio of R&D costs to sales revenue was thus at 6.0% and thus approximately at the level of the previous reporting year.
As of December 31, 2011, the Sartorius Group employed 4,887 people, 372 persons or 8.2% more than in the previous year. Most of the new staff hired were for the Biotechnology Division to reinforce personnel capacity especially at the production sites in Goettingen, Germany, and in Aubagne, France, due to the continued high demand for single-use products. This number does not include the workforce of 412 at the Finnish laboratory supplier Biohit, whose liquid handling business Sartorius had acquired on December 14, 2011. When this acquisition is considered, headcount rose by 784, or 17.4%.
Dividends Set to Rise by More than a Third
The Supervisory Board and the Executive Board will submit a proposal to the Annual Shareholders’ Meeting on April 19, 2012, to raise dividends to 0.82 euro per preference share (previous year: 0.62 euro) and 0.80 euro per ordinary share (previous year: 0.60 euro). Compared with the previous year (10.4 million euros), the total amount disbursed would thus increase 32.8% to 13.8 million euros.
Positive Outlook for Fiscal 2012
Sartorius expects significantly profitable growth for the year 2012 as well. The company anticipates that full-year sales will grow by about 10% in constant currencies. Around five percentage points of this rate is forecast to be generated by initial consolidation of the Biohit liquid handling business that was acquired at the end of 2011. Management continues to project that operating earnings will likewise increase by around 10%. “Our business is largely driven by stable trends so we are confident about its development in 2012,“ commented Dr. Kreuzburg. “However, we also see that uncertainty over the global economy has mounted during the past few months.”
New Division Structure Starting January 2012
As of January 1, 2012, Sartorius reorganized its division structure, which until then consisted of the two divisions Biotechnology and Mechatronics. From the first quarter of 2012 onwards, the company will report its business figures according to three segments: Bioprocess Solutions, Lab Products & Services and Industrial Weighing. The new divisions each combine their respective businesses for the same customer groups and fields of application and thus more clearly reflect, and focus on, Sartorius's major markets. Moreover, they enhance transparency for investors and increase the company’s flexibility for further development of the Sartorius Group.
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