Sartorius Continues to Grow by Strong Double Digits
Earnings increased by around one-fourth
Sartorius closed the first nine months of 2016 with significant double-growth rates for sales revenue and earnings.
"Both divisions are continuing to grow faster than their respective markets," stated Group CEO Dr. Joachim Kreuzburg, giving a positive summary of the Group's nine-month performance. "We increased our revenue by around 18% and earnings even by one-fourth over the prior-year period." For the final quarter, Kreuzburg expects good business performance as well and confirms the company's full-year guidance, which projects an increase of 15% to 18% percent in sales revenue and an underlying EBITDA margin of around 25%. Regarding the three startups acquired in June and July, he commented, "The integration of our most recent acquisitions is well on track. The combination of these young, highly innovative technologies with our international reach and sales strength provides additional promising growth potential."
Business Development of the Sartorius Group
In the first nine months of 2016, Sartorius increased its sales revenue by 17.9% in constant currencies from 830.3 million euros in the year-earlier period to 965.1 million euros (reported: 16.2%). All regions recorded significant double-digit growth rates, thus contributing to the dynamic business development of the Group. Sales revenue in the Asia | Pacific region rose 21.3% to 206.6 million euros, due in part to the delivery of some larger equipment orders. The Americas and EMEA also recorded substantial sales increases of 20.3% to 331.4 million euros and of 14.6% to 427.1 million euros, respectively, relative to a strong prior-year revenue base, especially in the third quarter. (All regional figures currency-adjusted)
Earnings in the reporting period rose overproportionately relative to sales yet again. Sartorius thus increased its underlying EBITDA by 24.6% to 241.4 million euros, and its respective margin reached 25.0%, up from 23.3% in the year-earlier period. Relevant net profit3 for the Group rose 25.3% from 78.9 million euros to 98.9 million euros. Earnings per ordinary share totaled 1.44 euros (9M 2015: 1.15 euros4) and earnings per preference share 1.45 euros (9M 2015: 1.16 euros4).
The Group's key financial indicators remained at a strong level after its recent acquisitions. At the end of the reporting period, the company's equity ratio was 39.8% and the ratio of net debt to underlying EBITDA was 1.6 (Dec. 31, 2015: 44.9% and 1.3, respectively). In line with its strong organic growth, Sartorius is currently investing at an above-average level in the expansion of its capacity. The capex ratio was 11.8% for the nine-month period.
Business Development of the Divisions
The Bioprocess Solutions Division, which focuses on single-use products for the manufacture of biopharmaceuticals, again saw especially strong growth. All product segments reported double-digit growth rates within a continued dynamic market environment. Thus, revenue rose 21.9% to 726.7 million euros in constant currencies (reported: 20.3%). Besides excellent organic growth, the acquired companies BioOutsource, Cellca and kSep contributed a good 2 percentage points to the division's non-organic growth. Underlying EBITDA for Bioprocess Solutions grew overproportionately with respect to sales, by 27.7% to 202.6 million euros. The division's margin attained 27.9% relative to 26.3% in the comparable period.
The Lab Products & Services Division, which offers technologies and equipment for laboratories primarily for the pharmaceutical sector and public research, also continued its positive business development. Its sales revenue increased 7.1% in constant currencies to 238.4 million euros (reported: 5.5%). The companies acquired in mid-2016, IntelliCyt and ViroCyt, contributed about 2 percentage points to this gain. Underlying EBITDA for Lab Products & Services rose 10.4% to 38.7 million euros. The division's margin reached 16.2% relative to 15.5% in the prior-year period.
Forecast for the Full Year
Based on the company's performance in the first nine months, management confirmed its sales and earnings forecast for the full year of 2016: In constant currencies, Group sales revenue is projected to increase by about 15% to 18% and its underlying EBITDA margin from 23.6% a year earlier to 25.0%. In the current fiscal year, Sartorius now plans to invest around 11.5% of sales revenue, especially due to the substantial expansion of its production capacities (previous guidance: around 10%).
For the Bioprocess Solutions Division, management continues to expect that sales will grow by about 19% to 22%. This guidance includes a good 2 percentage points of non-organic growth expected to be contributed by the acquisitions of BioOutsource, CellCa and kSep. The division's underlying EBITDA margin is projected to increase year over year from 26.5% to around 28.0%.
Sartorius also continues to forecast that assuming an overall stable economic environment, sales for the Lab Products & Services Division will grow by about 6% to 9%. This projection includes a good 3 percentage points expected to be contributed by the acquisitions of IntelliCyt and ViroCyt. Due to the temporary dilutive effects related to the acquisitions previously mentioned, the division's underlying EBITDA margin is anticipated to remain approximately at the prior-year level of 16.0%.
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