24-Apr-2018 - Sartorius AG

Sartorius starts off fiscal 2018 successfully

Exchange rate effects dampen profit growth

Sartorius looks back on a successful first quarter 2018. "Both divisions started off the year strongly in line with our expectations and further increased their revenues in the first quarter of 2018 in all regions. On the currency side, however, we faced some headwinds, especially due to the weakness of the U.S. dollar against the euro, which dampened our profit growth. Order intake developed at an encouragingly strong level for both divisions so we look optimistically to the months ahead and confirm our full-year forecast," said CEO Dr. Joachim Kreuzburg.

Business development of the Sartorius Group

In the first quarter of 2018, Sartorius increased its sales revenue by 11.4% (reported: 6.3%) in constant currencies to 364.9 million euros, with acquisitions contributing around 4.5 percentage points to this growth. Order intake for the same period rose 12.4%.

Regionally, Asia|Pacific recorded the strongest growth, with sales up 18.2% to 89.0 million euros. In the Americas, sales revenue also grew significantly at a rate of 13.8% to 116.6 million euros. In the EMEA region, Sartorius generated revenue of 159.3 million euros, 6.3% more than in the comparable year-earlier period. (All growth rates for the regions and order intake in constant currencies.)

Despite unfavorable currency effects, underlying EBITDA increased by 4.7% compared against a strong prior-year base and reached 88.6 million euros. The underlying EBITDA margin was diluted by around 0.5 percentage points due to currency effects and reached 24.3% at the end of the first quarter of 2018 relative to 24.7% for the first three months of 2017. Relevant net profit for the Group grew by 8.0% from 34.4 million euros to 37.2 million euros. Earnings per ordinary share totaled 0.54 euros (Q1 2017: 0.50 euros) and earnings per preference share 0.55 euros (Q1 2017: 0.51 euros).

The Group's key financial indicators continued to remain at robust levels. At the end of the reporting period, the company's equity ratio was 35.4%, and its ratio of net debt to underlying EBITDA stood at 2.5 (Dec. 31, 2017: 35.1% and 2.5, resp.). The capex ratio in the first three months of 2018 was 10.3%, as expected, due to the expansion of the Group's worldwide infrastructure.

Business development of the divisions

The Bioprocess Solutions Division, which offers a wide array of innovative technologies for the manufacture of biopharmaceuticals, recorded first-quarter sales growth of 10.0% in constant currencies to 263.4 million euros (reported: 4.9%). Demand for single-use technologies was especially strong in the reporting period. Consolidation of Umetrics acquired in the previous year contributed around 1.5 percentage points of non-organic growth in the first three months of 2018. Order intake rose by 9.1% in constant currencies.

Underlying EBITDA of the Bioprocess Solutions Division rose somewhat underproportionately relative to sales, by 2.9% to 70.3 million euros. Impacted by currency effects, the Group's corresponding margin was 26.7% relative to 27.2% in the previous period.

The Lab Products & Services Division, which offers products and technologies for laboratories primarily in the pharma sector and in life science research, recorded a significant gain in revenue, up 15.3% in constant currencies (reported: 10.3%) to 101.4 million euros. The acquisition of Essen BioScience contributed non-organic growth of around 11 percentage points. In order intake, the division saw strong growth of 22.7% in constant currencies.

Underlying earnings for Lab Products & Services rose 12.6% to 18.3 million euros. Despite negative currency impacts, the division's earnings margin increased from 17.7% to 18.0%, especially driven by volume and product mix effects.

Forecast for the full year confirmed

Based on the company's performance in the first quarter of 2018, management confirmed its sales and earnings forecast for the full year: Group sales revenue is projected to increase by about 9% to 12% and its underlying EBITDA margin by about 0.5 percentage points compared with the year-earlier figure of 25.1%.
For the Bioprocess Solutions Division, management continues to expect that sales will grow about 8% to 11%. This figure includes non-organic growth of approximately 0.5 percentage points contributed to sales. The division's underlying EBITDA margin is projected to increase from 28.0% to around 28.5%.

Based on its unchanged forecast for the Lab Products & Services Division, Sartorius also continues to anticipate that sales will expand approximately 12% to 15%. This projection includes more than 2.5 percentage points of non-organic growth contributed by Essen BioScience consolidated as of the end of March 2017. The division's underlying EBITDA margin is expected to increase by around one percentage point to more than 19.0%.

All forecasts are based on constant currencies. Due to the latest foreign exchange developments, the results reported in actual currencies may differ. We will explain the particular effects during the course of 2018.

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