Sartorius with first-quarter uptick in sales and earnings
Göttingen, April 21, 2021
- Order intake up 89.2 percent; sales revenue up 61.6 percent;
underlying EBITDA margin 33.3 percent
- 20 percentage points of sales growth influenced by the coronavirus pandemic
- Accelerated expansion of production capacities in all regions on track as planned
The life science group Sartorius had an exceptionally strong start in fiscal 2021 and grew substantially in order intake1, sales revenue and earnings. Businesses related to the coronavirus pandemic additionally fueled this growth.
“Many of our products play an essential role in helping to overcome the pandemic. In addition to a very positive general business performance in the first quarter, we accordingly experienced strong demand for our products and technologies used in the development and production of vaccines as well as of coronavirus tests and achieved a sharp increase in sales. The substantial rise in the company’s profit margin was also supported by underproportionate development of costs, such as the low number of business trips as well as fewer new hires in non-production areas. These effects are expected to decrease as the year progresses. In many areas, we are working at the limits of our capacity and are therefore continuing to move ahead with accelerating the expansion of our production facilities and are hiring additional employees,” said Executive Board Chairman and CEO Joachim Kreuzburg. In the first three months of the current year, Sartorius has already created some 640 new jobs; the Group now employs around 11,300 people in total.
Business development of the Group
Group sales revenue surged by 61.6 percent to around 791 million euros in constant currencies (reported: +55.1 percent). The comparative base for these high growth figures, though, is the relatively low prior-year quarter, which was impacted in the Lab Products & Services Division by the lockdown in China due to the pandemic and overall did not yet include an acquisition that was consolidated as of May 2020. In the first quarter, acquisitions2 contributed overall about 12 percentage points to growth while the contribution attributable to businesses related to the coronavirus pandemic was about 20 percentage points. Order intake1 grew even more dynamically than sales revenue, rising to 1,139 million euros (in constant currencies: +89.2 percent, of which a good 30 percentage points were related to the coronavirus; reported: +80.9 percent). Underlying EBITDA1 climbed, due to economies of scale and underproportionate cost development, to 264 million euros, up from 138 million euros a year earlier (+91.2 percent). The corresponding margin rose to 33.3 percent (Q1 2020: 27.0 percent). Relevant net profit1 for the Group soared by 111.8 percent to 122 million euros; earnings per ordinary share were 1.77 euros (Q1 2020: 0.83 euros); earnings per preference share, 1.78 euros (Q1 2020: 0.84 euros).
Business development in the regions
Sartorius increased its revenues very significantly in all three geographies. Sales in the Asia | Pacific region surged by 71.1 percent to 204 million euros. Revenue in the EMEA3 region totaled 334 million euros, a gain of 63.1 percent. Sales in the Americas amounted to 253 million euros, equating to 53.4 percent growth. (All figures in sales revenue growth in constant currencies)
Key financial indicators
The Sartorius Group has a very sound balance sheet and financial key figures. Its equity ratio stood at 29.7 percent at the end of the quarter (December 31, 2020: 29.9 percent). Net debt to underlying EBITDA1 was 2.2 on the reporting date, relative to 2.6 at year-end 2020. The ratio of capital expenditures (CAPEX) to sales revenue increased as expected to 10.2 percent due to the Group’s extensive investment program (Q1 2020: 8.8 percent).
Business development of the divisions
The Bioprocess Solutions Division that offers a wide array of innovative technologies for manufacturing biopharmaceuticals expanded in the reporting year at an exceptionally dynamic rate by 61.4 percent in constant currencies to 611 million euros (reported: +54.9 percent), benefiting from the ramp-up in coronavirus vaccine production by many manufacturers. The latter contributed a good 23 percentage points to this increase. Non-organic growth contributed by the acquisitions closed in the prior year was around 9 percentage points. The division’s order intake1 increased even more strongly than its sales revenue, soaring 97.1 percent in constant currencies to 953 million euros (reported: +88.3 percent). Part of this high order intake is due to the changed ordering patterns of some customers who in the current situation have been placing their orders further in advance than usual.
Underlying EBITDA1 of the Bioprocess Solutions Division was 217 million euros, up 81.1 percent, also very significantly above the prior-year figure of 120 million euros. The division’s respective margin climbed year over year from 30.4 percent to 35.6 percent. Economies of scale as well as a cost base that increased only slowly due to the pandemic contributed to this rise in profitability.
The Lab Products & Services Division specializing in equipment and technologies for life science research and pharmaceutical laboratories grew just as strongly as the Bioprocess Solutions Division in the first quarter, also against weaker prior-year comparables as described above, by 62.3 percent in constant currencies to 180 million euros (reported: +56.0 percent). While non-organic growth accounted for about 23 percentage points, organic growth was a good 39 percentage points of which around 9 percentage points were impacted by high demand for components used in coronavirus test kits. Order intake1 rose sharply by 56.8 percent (reported: +50.5 percent) to 186 million euros.
Underlying EBITDA of the Lab Products & Services Division jumped by 157.9 percent to 46 million euros (Q1 2020: 18 million euros); the division’s respective margin reached 25.7 percent (Q1 2020: 15.6 percent). This very substantial margin expansion was based on economies of scale, positive development of the product mix and cost development that was underproportionate due to the pandemic.
Forecast raised for the full year of 2021 confirmed
Management confirmed its growth forecast for fiscal 2021, which had been raised in mid-March based on very strong order intake and high demand anticipated to continue in the further course of the year. Accordingly, management projects consolidated sales growth of around 35 percent (of which 5.5 percentage points are expected to be contributed by acquisitions and about 16 percentage points by business related to the coronavirus pandemic). Regarding profitability, an underlying EBITDA1 margin of about 32 percent is forecasted for the Group. Management points out that in the currently very dynamic and volatile situation, forecasts are subject to higher‑than‑average uncertainties.
For the Bioprocess Solutions Division, Sartorius anticipates that sales will increase by about 40 percent (of which 6 percentage points projected to be contributed by acquisitions and about 18 percentage points by business related to the coronavirus pandemic). The division’s underlying EBITDA1 margin is forecasted at about 34 percent. Expected sales growth for the Lab Products & Services Division is about 20 percent (of which 5 percentage points projected to be contributed by acquisitions and about 5 percentage points by business related to the coronavirus pandemic). The division’s underlying EBITDA1 margin is forecasted to reach about 24 percent.
The CAPEX1 ratio for the Group is projected at about 14 percent. Sartorius’ approximately 400‑million‑euro investment program especially covers the partly extended and accelerated expansion of production capacities, primarily at sites in Germany, Puerto Rico, China, and South Korea. Net debt to underlying EBITDA1 is expected to be about 2.0 at year-end. Possible acquisitions are not included in these projections.
Mid-range targets updated in January 2021 remain unchanged and assume that by 2025, consolidated sales revenue will increase to around 5 billion euros at an underlying EBITDA margin of around 32 percent.
All forecasts are based on constant currencies, as in the past years. In addition, the company assumes that the global economy will increasingly recover as the current year progresses and that supply chains will remain stable.
Financial indicators of the comparative period partly restated due to the finalized purchase price allocation of Biological Industries
1 Sartorius 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.
- Order intake: all customer orders contractually concluded and booked during the respective reporting period
- Underlying EBITDA: earnings before interest, taxes, depreciation, and amortization and adjusted for extraordinary items
- Relevant net profit: profit for the period after non-controlling interest, adjusted for extraordinary items and non-cash amortization, as well as based on the normalized financial result and the normalized tax rate
- Ratio of net debt to underlying EBITDA: quotient of net debt and underlying EBITDA over the past 12 months, including the pro forma amount contributed by acquisitions for this period
2 Acquisitions of selected life science businesses from Danaher Corporation as well as of BIA Separations and WaterSep BioSeparations
3 EMEA = Europe, Middle East, Africa
This press release contains forward-looking statements about the future development of the Sartorius 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 assumes no liability for updating such statements in light of new information or future events. This is a translation of the original German-language press release. Sartorius shall not assume any liability for the correctness of this translation. The original German press release is the legally binding version.