Sartorius Stedim Biotech off to a dynamic start in fiscal 2019
Aubagne, April 18, 2019
- Sales revenue up 19.3%; order intake up 18.7%; earnings margin 28.6%1)
- Growth across all product categories and geographies; the Americas particularly strong
- Guidance for 2019 confirmed
Sartorius Stedim Biotech (SSB), a leading partner of the biopharma industry, reported strong double-digit growth in sales revenue, order intake and earnings for the first quarter of 2019.
Sales revenue increased against relatively moderate comparables in the prior-year quarter by 19.3% to 342.9 million euros (reported: +22.0%); order intake also saw a significant uptick, rising 18.7% to 381.3 million euros (reported: +21.5%). Underlying EBITDA1) rose overproportionately relative to sales by 32.5% to 98.1 million euros. The respective margin reached 28.6% (Q1 2018: 26.3%), with a good half of a percentage point of this increase resulting from a change in accounting rules2), as expected. Relevant net profit after non-controlling interest3) for the Group surged by 32.9% to 62.6 million euros, resulting in earnings per share of 0.68 euros compared with 0.51 euros a year earlier.
“Though we anticipated a good start into the year, we are very pleased with this strong set of results,” said Dr. Joachim Kreuzburg, Chairman of the Board. “Expansion was driven by high demand across the entire portfolio and all regions. Given the stronger comparables for the next quarters and an increasing dilutive effect due to the modified setup of our cell culture media business, we expect that growth rates will normalize over the course of the year. On this basis we confirm our 2019 full-year guidance.”
With respect to geographies, the Americas recorded the highest increase in sales, which were up 26.7% to 124.8 million euros. Asia|Pacific once again saw significant growth of 16.9% to 77.5 million euros, whereas in the EMEA region, sales totaled 140.6 million euros, equaling a gain of 14.8%. (All growth rates in constant currencies.)
Key financial indicators
The financial position of the Group remained at very comfortable levels. Driven by strong earnings, equity of Sartorius Stedim Biotech grew from 1,044.9 million euros as of the end of fiscal 2018 to 1,055.7 million euros as of March 31, 2019. Mainly due to a change in accounting standards2), the equity ratio decreased slightly to 63.6% (December 31, 2018: 66.5%). At 0.3, the ratio of net debt to underlying EBITDA was below the prior year’s level of 0.4. The ratio of capital expenditures to sales revenue was 9.4% (March 31, 2018: 9.2%)4).
Positive outlook for 2019
Based on its performance in the first quarter 2019, Sartorius Stedim Biotech confirms its guidance for fiscal 2019. Consolidated sales revenue is projected to grow by about 7% to 11%. This forecast reflects the changes to the sales agreement with the Lonza group for cell culture media. Without these changes, sales growth would probably be approximately 3 percentage points higher.
Regarding profitability, management forecasts that the company's underlying EBITDA margin will increase by slightly more than one percentage point over the prior-year figure of 28.2%. Of this figure, approximately half a percentage point is expected to be an operational increase, whereas the remainder will result from changes to the IFRS accounting rules2). The ratio of capital expenditures to sales revenue is projected to be around 11%, down from the year-earlier figure of 14.6%4).
All figures in this outlook are given in constant currencies. In spite of countermeasures already taken, a disorderly exit of the United Kingdom from the EU may have a certain impact on our supply chain; yet a reliable forecast of possible effects cannot be given at the present time.
1) Underlying EBITDA = earnings before interest, taxes, depreciation and amortization, and adjusted for extraordinary items
2) IFRS 16 is required to be applied as of 2019 and regulates accounting of lease contracts. This leads to a somewhat extended balance sheet and thus to a slightly lower equity ratio. Further, this results in reporting longer-term lease payments as depreciation and, accordingly, in a somewhat higher EBITDA, among other things. This does not entail any material changes concerning the Group’s relevant net profit or earnings per share.
3) Underlying net profit = net profit after non-controlling interest; adjusted for extraordinary items and non-cash amortization, as well as based on a normalized financial result and tax rate
4) As of 2019, CAPEX is based on cash flow instead of balance sheet computation; CAPEX ratio restated: 9.7% for Q1 2018; 14.6% for FY 2018.
This press release contains statements about the future development of the Sartorius Stedim Biotech Group. We cannot guarantee that the content of these statements will actually apply because these statements are based upon assumptions and estimates that harbor certain risks and uncertainties.