Sartorius releases preliminary unaudited figures for fiscal 2009

Today Sartorius, a leading international process and laboratory technology provider, released its preliminary unaudited figures for fiscal 2009. In the reporting period, business in both Group divisions showed substantially divergent trajectories.

The Biotechnology Division, which contributes a good two thirds to consolidated sales, reported dynamic growth and attained a new level in operating profit. By contrast, the Mechatronics Division posted sales and earnings development that was severely impacted by the global downturn. Nevertheless, this division achieved a turnaround during the course of the year and closed 2009 with positive operating earnings. For the Group, operating profit was higher than a year ago, despite the difficult economic climate. Cash flows from operating activities rose by more than two and a half times compared with the year-earlier figure. For 2010, management expects sales revenue and profit to increase in both Divisions.

Business Development of the Divisions

Sartorius Stedim Biotech

The Biotechnology Division, which operates under the name of Sartorius Stedim Biotech (SSB), increased its sales revenue in the reporting period by 9.4% from 366.0 million euros to 400.4 million euros (currency-adjusted: 8.3%). Order intake also considerably jumped 11.5% from 367.1 million euros to 409.2 million euros (currency-adjusted: 10.3%). Again, double-digit growth rates generated by the company’s business with single-use products for the biopharmaceutical industry substantially fueled this growth. In the reporting year, this business gained added momentum from vaccine manufacturers who significantly drove up demand for single-use bags and filters used in the production of the vaccine against the H1N1 virus. This effect contributed around two percentage points to growth. As expected, business with large-scale bioreactor systems, by contrast, slightly declined, but saw positive momentum as of the second half of the year.

Regarding regional distribution of sales revenue, all business regions with their significantly positive growth rates contributed to the successful development of sales. North America achieved the highest growth, where sales were up 18.1% (currency-adjusted: 11.6%), followed by Asia|Pacific, with sales up 7.8% (currency-adjusted: 4.7%), and Europe, up 5.1% (currency-adjusted: 6.5%).

This strong sales development is also reflected by the Biotechnology Division’s earnings. Its earnings before interest, taxes and amortization, which were adjusted for special items (underlying EBITA or operating earnings), showed substantial overproportionate improvement, surging 51.5% to 60.2 million euros. In the year-earlier period, underlying earnings were at 39.7 million euros. The corresponding EBITA margin rose from 10.9% to 15.0% and thus marks a new level. Besides the uplift in sales volume, the division’s enhanced product mix and stringent cost management were decisive for this boost in profitability.

Sartorius Mechatronics

Amid a climate of pronounced reluctance to invest shared by nearly all customer sectors, the Mechatronics Division reported a steep decline in demand for its products in the reporting year. This impacted its business with industrial weighing and control equipment slightly more than its business with laboratory instruments. By contrast, service business proved to be robust. Compared with a year ago, the division’s sales revenue dropped 17.9% from 245.6 million euros to 201.7 million euros (currency-adjusted: -19.3%). At 205.9 million euros, order intake also was down 15.2% from 242.7 million euros a year earlier (currency-adjusted: -16.6%). Following an especially steep plunge in first-half demand, business indicated initial signs of recovery at year-end. The regional pattern shows that the division’s decline in revenue was somewhat less pronounced in Asia|Pacific at a minus of 8.2% (currency-adjusted: -12.7%) than in the North American regions (-14.4%; currency-adjusted: -19.1%) and Europe (-22.4%; currency-adjusted -21.7%).

Despite the drop in sales, the Mechatronics Division posted slightly positive operating earnings of 0.7 million euros (previous year: 17.1 million euros). This increase was due to an extensive restructuring program, which was implemented in the reporting year to adapt the division’s structures to the changed market conditions and which reduced its annual cost base by a good 30 million euros. The division’s underlying EBITA margin was 0.4% compared with 7.0% for the year-earlier period.

Business Development of the Sartorius Group

At Group level, the excellent development of the Biotechnology Division's business compensated for the recession-induced losses in the Mechatronics Division for the most part. Consolidated sales revenue in 2009 was 602.1 million euros compared with 611.6 million euros a year ago, and therefore eased only slightly by 1.6% (currency-adjusted: -2.7%) relative to the previous reporting period. At 615.1 million euros, order intake was slightly above the year-earlier figure of 609.8 million euros (0.9%; currency-adjusted: -0.4%).

On account of the Biotechnology Division’s significant rise in profitability, consolidated operating earnings even rose 7.2% from 56.8 million euros to 60.9 million euros. The corresponding earnings margin climbed from 9.3% to 10.1%. Extraordinary expenses, which are predominantly comprised of provisions for the restructuring program in the Mechatronics Division, totaled 30.0 million euros. Unadjusted consolidated EBITA was 30.9 million euros (previous year: 56.8 million euros).

The Group’s relevant net profit – underlying consolidated net profit after minority interest without the two non-cash items of amortization and interest for share price warrants – was also slightly up from 18.2 million euros a year ago, at 20.8 million euros; this equates to earnings per share of 1.22 euros, up from 1.07 euros in the previous year. In particular, due to the significant restructuring charges in the Mechatronics Division the unadjusted consolidated net profit after minority interest amounts to -7.3 million euros (12.4 million euros).

Moreover, in the reporting year Sartorius posted a significant increase in operating cash flow. Because of strong operating profit, stringent management of working capital and the factoring program implemented in middle of the reporting year, operating cash flow surged from 53.0 million euros to 143.4 million euros.