Sartorius Stedim Biotech Group grows by double digits in 2019; strong outlook for 2020
Aubagne, January 28, 2020
- Group sales revenue up 17.0% in constant currencies; underlying EBITDA margin1) up 1.1 percentage point to 29.3%
- Dynamic development based on strong demand across all product categories and geographies
- Number of employees grew by 10% to more than 6,200
- Positive outlook for 2020: Sales revenue expected to rise 11% to 14% in constant currencies with further increase in profitability
Sartorius Stedim Biotech (SSB), a leading partner of the biopharma industry, has continued on its profitable growth track in fiscal 2019. According to preliminary figures, the Group grew by double digits in sales revenue, order intake and earnings, recording gains across all geographies.
Sales revenue totaled 1,440.6 million euros, rising 17.0% in constant currencies (reported: +18.8%) against the prior-year figure. Sartorius Stedim Biotech thus slightly exceeded its upgraded forecast, which had predicted sales growth at the upper end of the range of 12% to 16%. Growth was almost entirely organic, as the acquisition of the cell culture media specialist Biological Industries in mid-December 2019 only contributed a marginal increase. Order intake1) also rose by 16.2% in constant currencies (reported: +18.1%) to 1,543.5 million euros.
“2019 was another very successful year for Sartorius Stedim Biotech with ongoing strong demand for SSB’s products backed by dynamic end-markets. Besides strong top and bottom line growth, we opened new production facilities, expanded our product portfolio and added key technologies through the acquisition of Biological Industries. We consider ourselves being very well positioned to continue above-market growth in 2020,” said Dr. Joachim Kreuzburg, Chairman of the Board and CEO.
Geographically, the positive performance of the Group was broad-based, with all regions contributing to growth. EMEA (Europe | Middle East | Africa) generated sales revenue of 575.1 million euros, which is a year-over-year increase of 13.0% (reported: +13.2%). The Americas region recorded a sales revenue gain of 17.1% (reported: +21.1%) to 511.6 million euros, following strong development in 2018. Fueled by dynamic project business in particular, the Asia | Pacific region achieved the highest growth rates, with sales revenue surging 23.9% (reported: +25.8%) to 353.8 million euros.
(All changes in sales revenue and order intake are given in constant currencies, unless otherwise stated.)
Underlying EBITDA1) rose overproportionately relative to sales by 23.1% to 421.5 million euros due to economies of scale and to the IFRS 16 Standard required to be applied for the first time in 2019.2) As expected, the respective margin increased to 29.3% from 28.2% in 2018, with around half a percentage point attributable to IFRS 16. Underlying net profit1) after non-controlling interest for the Group was significantly higher than the prior-year figure of 219.3 million euros, reaching 262.9 million euros. Earnings per share1) amounted to 2.85 euros, up from 2.38 euros in fiscal 2018.
Following the further expansion of our workforce in customer facing functions, research and development, as well as operations, the number of employees rose by 10% or 566 people to 6,203.
Key financial indicators
SSB continued to make substantial investments in expanding its global production capacity, even though, as expected, its CAPEX ratio1) decreased upon the completion of several large projects from 14.6% a year earlier to 9.4%. Due to strong operating cash flow and despite the intensive investment activity and successful acquisition, the ratio of net debt to underlying EBITDA1) was 0.3 and hence below the previous year's figure of 0.4. Equity increased from 1,044.9 million euros at year-end 2018 to 1,177.6 million euros as of the reporting date. The equity ratio remained at a very comfortable level of 64.7%, decreasing slightly from 66.5% due to the change in IFRS 16. The SSB Group continues to have a very solid balance sheet and financial position.
Positive outlook for 2020
For fiscal 2020, the management of Sartorius Stedim Biotech anticipates continued profitable growth. Consolidated sales revenue is projected to increase by 11% to 14%, with Biological Industries contributing about two percentage points to this growth. With respect to profitability, the company's underlying EBITDA margin1) is expected to rise to 29.5%. The CAPEX ratio1) is projected to be around 8% (previous year: 9.4%).
The above forecast does not consider the acquisition of select Danaher life science platform business, which was announced on October 21, 2019, and is currently undergoing antitrust clearance. Following the closing of this transaction, presently expected around the end of the first quarter of 2020, management will adjust its full-year guidance accordingly.
All forecasts are based on constant currencies, as in the past years.
1) Sartorius Stedim Biotech publishes alternative performance measures that are not defined by international accounting standards. These are determined with the aim of improving the comparability of business performance over time and within the industry.
- Underlying EBITDA: earnings before interest, taxes, depreciation and amortization and adjusted for extraordinary items
- Order intake: all customer orders contractually concluded during the respective reporting period
- Underlying net profit: profit for the period after non-controlling interest; adjusted for extraordinary items and non-cash amortization, as well as based on a normalized financial result and tax rate
- Underlying earnings per share: relevant net profit for the period divided by the number of shares outstanding (92,180,190)
- CAPEX ratio: investment payments in relation to sales revenue for the same period. Since 2019 and as a result of the change in IFRS 16 accounting principles, CAPEX has been based on cash flow instead of balance sheet computation; CAPEX ratio restated: 14.6% for FY 2018
2) IFRS 16 is required to be applied as of 2019 and regulates accounting of lease contracts. This has led to a somewhat extended balance sheet and thus to a slightly lower equity ratio. Further, this has resulted in reporting longer-term lease payments as depreciation and, accordingly, in a somewhat higher EBITDA, but does not entail any material changes concerning the Group’s relevant net profit or earnings per share.
All figures given above are subject to a final review by statutory auditors.
This press release contains forward-looking statements about the future development of the Sartorius Stedim Biotech Group. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such statements. Sartorius Stedim Biotech assumes no liability for updating such statements in light of new information or future events.
This is a translation of the original French-language press release. Sartorius Stedim Biotech shall not assume any liability for the correctness of this translation. The original French press release is the legally binding version.