Sartorius Reviews Fiscal 2010
CEO Kreuzburg: “For Sartorius, 2011 will be a year of further strategic development and structural optimization”
Sartorius, a leading international laboratory and process equipment provider, successfully closed the year 2010, with strong gains in revenue and earnings. At the annual press conference, Group CEO Dr. Joachim Kreuzburg, satisfied with the company’s 2010 results, stated: “The year 2010 was a highly successful year for Sartorius. The Group has grown significantly and is operating at a strong level of profitability. Also in view of our very solid key financials, we see ourselves in a position to further develop our company at a dynamic pace.” For the current fiscal year, Dr. Kreuzburg expects Group sales to grow organically by 6% to 8% in constant currencies and the operating EBITA margin to reach approximately 14%.
“Besides taking further strides in achieving sales and earnings growth, we have also set out to accomplish a number of challenging structural and strategic projects in 2011,“ continued Dr. Kreuzburg. These include transforming the Group into a management holding company, intermeshing the lab business activities of both divisions and further growing this business based on our cross-divisional strategy, as well as further enhancing operational excellence. “We are creating structures that will enable us to achieve further growth, also over the medium and long term, and that foster transparent and flexible management.”
Dynamic development of sales, order intake and earnings in the Sartorius Group
Sartorius generated consolidated sales revenue of 659.3 million in fiscal 2010. This equates to an increase of 9.5% (constant currencies: 6.4%). The gain in order intake was even stronger: It jumped 10.7% to 681.1 million euros (constant currencies: 7.5%). Both Group divisions and all regions contributed to this dynamic business development.
Regionally, Sartorius grew the strongest in Asia/Pacific. Here, sales revenue surged 17.6% in constant currencies; order intake soared 26.8%. These figures reaffirm the company's strategy of actively participating in growth regions such as China and India early on. In North America as well, Sartorius posted significant gains: Sales rose at a double-digit rate of 11.0% in constant currencies; order intake, at 4.5%. Because of an extraordinary effect on business in the year before, sales revenue in Europe edged up only by 0.3% in constant currencies; order intake in this region grew 4.9%.
Strong development of sales revenue was accompanied by overproportionate gains in earnings and in the division’s operating EBITA margin. Sartorius uses earnings before interest, taxes and amortization (EBITA) as the key profitability measure. To enable a more meaningful comparison with the year-earlier figures, the company reports earnings adjusted for extraordinary items (= operating EBITA or operating earnings) in addition to EBITA.
In the reporting period, the Group’s operating earnings surged 40.4% to 85.5 million euros from 60.9 million euros a year ago. Its respective margin climbed by nearly three percentage points from 10.1% to 13.0% and thus reached a new high. Both Group divisions contributed to this strong development of earnings. The Biotechnology Division further increased its already high profitability. The Mechatronics Division achieved substantial improvements following a weak 2009 due to the global economic crisis. Favorable exchange rates had a positive impact of half of a percentage point on the Group margin.
Extraordinary items stood at -6.3 million euros compared with the previous year’s figure of -30.0 million euros, which were predominantly expenses incurred for restructuring. Including these extraordinary items, consolidated EBITA increased more than 2.5 times from 30.9 million euros to 79.2 million euros.
The Group’s relevant net profit rose 87.7% from 20.8 million euros to 39.0 million euros. The corresponding earnings per share are 2.29 euros, well up from 1.22 euros a year ago. The unadjusted consolidated net profit after minority interest totals 31.0 million euros. In the previous year, it was negative, at -7.3 million euros, on account of the considerable expenses incurred for restructuring the Mechatronics Division.
Further improved, strong key financials
Despite the share buyback program for its biotechnology subgroup, Sartorius was able to pare back its net debt in the reporting year by a good 12% from 224.7 million euros to 196.9 million euros based on its strong operating cash flow of 96.0 million euros. The key debt service coverage ratio, or the ratio of net debt to underlying EBITDA, significantly improved and was at 1.8 at year-end compared with 2.6 as of December 31, 2009. The equity ratio also showed positive development and was at 40.5%, up from 38.9% a year ago.
R&D expenditures rose
In fiscal 2010, Sartorius spent 42.6 million euros on research and development, up 6.2% compared to the year-earlier figure of 40.2 million euros. Its ratio of R&D costs to sales revenue was thus at 6.5% and at the level of the previous reporting years.
Workforce slightly increased
As of December 31, 2010, the Sartorius Group employed 4,515 people, 192 persons or 4.4% more than in the previous year. This increase in head count was focused in particular on the Biotechnology Division, which strengthened its staff in the growth region of Asia and added formerly independent sales representatives in North America to the regular Sartorius workforce.
Dividends set to rise approximately 50%
The Supervisory Board and the Executive Board will submit a proposal to the Annual Shareholders’ Meeting on April 20, 2011, to raise dividends to 0.62 euro per preference share (prv. yr. 0.42 euro) and 0.60 euro per ordinary share (prv. yr. 0.40 euro). Compared with the previous year, the total amount disbursed would thus increase 48.8% from 7.0 million euros to 10.4 million euros.
Positive Outlook for 2011
Positive business development is anticipated to continue in the current year as well. For 2011, Sartorius expects sales to grow between 6% and 8% in constant currencies for both divisions and thus for the entire Group. Along with growth in sales, profitability is projected to further increase. Without any currency effects considered, the operating EBITA margin at Group level is forecasted to increase to around 14%. The Biotechnology Division is expected to contribute an operating margin of approximately 17% and the Mechatronics Division a margin of around 8% to this result. Furthermore, management anticipates a significantly positive operating cash flow.
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