Preliminary consolidated results for 2010:
“We are proud of our fourth quarter 2010 results, which closed a highly successful fiscal year in terms of financial results, pipeline and geographic expansion, notwithstanding a challenging macroeconomic environment. In 2010 we have established a strong base for our future long-term underlying growth”
- Consolidated Revenues at € 745.8 million, up 4.9% compared to 2009 (8.2% at effective exchange rates);
- EBITDA at € 120.2 million (16.1% of revenues, compared to 14.4% in 2009) and EBIT at € 71.4 million (9.6% of revenues, compared to 7.5% in 2009);
- Net profit up 68.6% at € 39.1 million (5.2% of revenues);
- Net financial debt as of December 31, 2010 at € 128.7 million, significantly down vs. € 181.6 million as of December 31, 2009 and vs. € 156.4 million as of September 30, 2010.
In the fourth quarter of 2010 consolidated revenues grew 5.7% at € 195.6 million. EBITDA at € 37.5 million, or 19.2% of revenues (17.4% in the fourth quarter 2009), EBIT at € 20.3 million, or 10.4% of revenues (6.6% in the fourth quarter 2009). Net profit more than doubled at € 13.0 million.
For fiscal year 2011, the Company expects consolidated revenues to grow 3-5% compared to 2010, the EBITDA margin to improve to approximately 17% of revenues and net profit in the range of € 49-53 million, up 25-35% vs. 2010. For 2011 Sorin Group expects to generate free cash flow approximately equal to its net profit.
The Board of Directors of Sorin S.p.A. (MIL:SRN) meeting today under the chairmanship of Rosario Bifulco reviewed the fourth quarter 2010 and the preliminary 2010 consolidated results. The Board of Directors will meet to approve the final draft of the 2010 consolidated Financial Statements on March 17, 2011.
"We are proud of our fourth quarter 2010 results, which closed a highly successful fiscal year in terms of financial results, pipeline and geographic expansion, notwithstanding a challenging macroeconomic environment. In 2010 we have established a strong base for our future long-term underlying growth," said André-Michel Ballester, Chief Executive Officer of the Sorin Group.
CONSOLIDATED REVENUES IN THE FOURTH QUARTER OF 2010
In the fourth quarter of 2010, Sorin Group reported Revenues of € 195.6 million, up 10.6% (5.7% at the same perimeter and exchange rates) over the same period of 2009, driven by the excellent performance of the Cardiopulmonary business unit, biological valves and defibrillators.
- The Cardiopulmonary Business Unit (heart-lung machines, oxygenators and autotransfusion devices) reported revenues of € 93.9 million, up 6.7% compared to the fourth quarter of 2009. This result, the business unit's best quarter of the year, is due to strong sales in Heart-lung machines, the increase in market share of the Autotransfusion segment and the excellent performance of Oxygenators, which also benefited from the integration of Gish Biomedical into the Group. There was also a significant positive contribution from emerging markets.
- The Cardiac Rhythm Management Business Unit (implantable devices to manage cardiac rhythm disorders) reported revenues of € 71.5 million, up 6.6% compared to the fourth quarter of 2009, thanks to the positive results in all main markets, especially in the US. Growth was mainly driven by defibrillators and CRT-Ds, while revenues for pacemakers were essentially flat.
- The Heart Valves Business Unit (Mechanical and Tissue Heart Valves and Valve Repair products) reported revenues of € 29.7 million, slightly up compared to the same period of 2009. The quarter was characterized by the positive performance of tissue valves, boosted by a solid performance in the US market. This was partially offset by a decline in mechanical valves due to the continued market shift to tissue valves.
PRELIMINARY CONSOLIDATED RESULTS FOR 2010
In 2010, Sorin Group reported Revenues of € 745.8 million, up 4.9%(8.2% at effective exchange rates) compared to 2009.
- The Cardiopulmonary Business Unit reported revenues of € 337.8 million in 2010, up 2.5% (6.7% at effective exchange rates) compared to 2009.
The favorable result is mainly attributable to strong sales of heart-lung machines in the main European markets and in the United States. To strengthen Sorin's worldwide leadership position in this segment, the Group introduced the new C5 heart-lung machine. This expanded the breadth of Sorin's product offering allowing it to compete in multiple price segments in the market.
Sorin's oxygenator business benefited from the acquisition, in June 2010, of Gish Biomedical which further strengthened Sorin's international presence. In 2010 the Group focused on the development of the new line of LinOx oxygenators, which is expected to receive the CE mark by the end of the current year. This range of new products will significantly reduce manufacturing costs with a favorable impact on future profitability. The Group expects this highly innovative product line to strengthen its current market position.
Autotransfusion revenues also remained essentially flat in 2010, with the Group maintaining its market share in the main international markets. During the year, Sorin launched XtraTM, the next generation autotransfusion system. The Company featured XtraTM at the 24th Annual EACTS Congress in Geneva in September 2010 and subsequently obtained FDA approval. This innovative line of products will strengthen Sorin's presence in this segment.
- The Cardiac Rhythm Management Business Unit reported revenues of € 284.6 million in 2010, up 8.4% compared to 2009 (11.3% at effective exchange rates), driven by the positive performance on the US market as well as on the main European markets. The Group obtained good results on the Japanese market despite the negative effects of the scheduled change in reimbursement.
The High Voltage business reported strong growth thanks to the increasing penetration of the US market. The Company also achieved good results in the Japanese market and in the main European markets. In February 2010 Sorin introduced the Paradym™ CRT-D family of products in the US. Paradym™ CRT-D is a next generation of defibrillator for cardiac resynchronization therapy. Some of its innovative features include higher energy levels, quick recharging times and durability, all in a smaller size. Furthermore, during 2010 the last generation of mono- and bi-phasic Paradym™ ICD implantable cardioverter defibrillators, already present on the European market since 2009, were launched in Japan.
In the Low Voltage segment, characterized by lower market growth rates, Sorin Group reported a moderate increase, helped in particular by European markets where Sorin is traditionally strong.
During the year Sorin Group continued its strong commitment to research and development and innovation. In collaboration with Orange, significant progress was made on the development of the Remote Monitoring system, a highly innovative technology that allows medical staff to have access to data while the patient is at home. The company expects to launch this important technology towards the end of the current year. Sorin also achieved significant clinical results with its proprietary SonR technology. The CLEAR study, which involved 156 patients in 51 hospital centers, demonstrated that regular optimization of CRT patients using Sorin Group's SonR sensor technology improves clinical response rate to 86% as compared to 62% in patients receiving standard medical treatments. This is a major advance for heart failure patients and proves the efficacy of this important technology.
- The Heart Valves Business Unit reported revenues of € 120.5 million, up 3.4% compared to 2009 (6.8% at effective exchange rates), driven by the biological valves segment.
The mechanical valves segment is declining as a percentage of total Valve implants, in line with expectations, while Sorin's performance during the year was positive in emerging markets.
Sorin's tissue valves business reported positive results mainly due to MitroflowTM market shares gains in the United States. During 2010, Sorin Group continued to focus on the PercevalTM S project, the innovative self-anchoring biological valve that obtained CE Mark on January 31, 2011. PercevalTM S is indicated for the rapid and minimally invasive surgical replacement of the aortic valve in patients suffering from aortic stenosis. It has a self-anchoring frame that enables the surgeon to replace the diseased valve without suturing it into place. PercevalTM S showed very high reliability levels in clinical studies. To date, cardiac surgeons at 25 centers throughout Europe have implanted the PercevalTM S valve in over 500 patients.
Gross Profit rose to € 439.1 million, or 58.9% of revenues, compared to € 384.3 million in 2009, or 55.8% of revenues, with a significant improvement generated by manufacturing cost reduction programs and a more favorable geographic and product mix, along with a positive foreign exchange effect.
Selling, General and Administrative expenses (SG&A) were € 293.9 million, or 39.4% of revenues, compared to €266.7 million, or 38.7% of revenues, in 2009. Growth in percentage terms on sales is entirely attributable to the impact of the adoption of hedge accounting during 2010. Excluding such an impact, SG&A fell to 38.0% of revenues, compared to 38.7% in 2009.
Research and Development (R&D) expenses increased by 13.4% to € 66.9 million (€ 59.0 million in 2009). This item also increased as a percentage of revenues, from 8.6% in 2009 to 9.0% in 2010, confirming Sorin Group's commitment to innovation and new product development.
EBITDA in 2010 rose 20.9% to € 120.2 million, or 16.1% of revenues, compared to € 99.4 million, or 14.4% of revenues, in 2009.
EBIT in 2010 rose 38.6% to € 71.4 million (9.6% of revenues), compared to € 51.5 million (7.5% of revenues) in 2009. Special items negatively impacted results during the period by € 6.9 million. This amount includes restructuring charges for € 4.5 million, of which € 1.0 million was associated with the integration of Gish Biomedical and € 3.5 million was related to restructuring charges to strengthen the industrial and management efficiency of the Group. A detailed analysis of Special items is shown in the attached table. Excluding Special Items, EBIT grew 33.7% to € 78.3 million, compared to € 58.6 million in 2009.
Net Profit rose significantly by 68.6% to € 39.1 million (5.2% of revenues) compared to € 23.2 million in 2009 (3.4% of revenues).
Net financial debt as of December 31, 2010 amounted to € 128.7 million, significantly lower than € 181.6 million as of December 31, 2009 and € 156.4 million as of September 31, 2010. Net cash generation, equal to € 52.9 million during 2010, was mainly driven by an improvement in profitability and a reduction in working capital. Net Special Items in 2010 were negligible and included in particular the payment, in the fourth quarter 2010, of €7.9 million for the final settlement with the US Justice Department, as announced on October 22, 2010.
Guidance for the current fiscal year
For fiscal year 2011, the Company expects consolidated revenues to grow 3-5% compared to 2010, the EBITDA margin to improve to approximately 17% of revenues and net profit in the range of € 49-53 million, up 25-35% vs. 2010. For 2011 Sorin Group expects to generate free cash flow approximately equal to its net profit.
For the first quarter 2011 the Company expects revenues to grow some 3-5% compared to the same period of 2010 and the net profit to be approximately € 8-10 million.
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