Sartorius Stedim Biotech Group Grows by Double Digits in 2019; Strong Outlook for 2020

Publisher: The Insight Partners

Sartorius Stedim Biotech (SSB), a partner of the biopharma industry, has continued on its profitable growth track in fiscal 2019. According to preliminary figures, the Group grew by double digits in sales revenue, order intake and earnings, recording gains across all geographies.

Sales revenue totaled 1,440.6 million euros, rising 17.0% in constant currencies (reported: +18.8%) against the prior-year figure. Sartorius Stedim Biotech thus slightly exceeded its upgraded forecast, which had predicted sales growth at the upper end of the range of 12% to 16%. Growth was almost entirely organic, as the acquisition of the cell culture media specialist Biological Industries in mid-December 2019 only contributed a marginal increase. Order intake1) also rose by 16.2% in constant currencies (reported: +18.1%) to 1,543.5 million euros.

"2019 was another very successful year for Sartorius Stedim Biotech with ongoing strong demand for SSB's products backed by dynamic end-markets. Besides strong top and bottom line growth, we opened new production facilities, expanded our product portfolio and added key technologies through the acquisition of Biological Industries. We consider ourselves being very well positioned to continue above-market growth in 2020," said Dr. Joachim Kreuzburg, Chairman of the Board and CEO.

Geographically, the positive performance of the Group was broad-based, with all regions contributing to growth. EMEA (Europe | Middle East | Africa) generated sales revenue of 575.1 million euros, which is a year-over-year increase of 13.0% (reported: +13.2%). The Americas region recorded a sales revenue gain of 17.1% (reported: +21.1%) to 511.6 million euros, following strong development in 2018. Fueled by dynamic project business in particular, the Asia | Pacific region achieved the highest growth rates, with sales revenue surging 23.9% (reported: +25.8%) to 353.8 million euros.

(All changes in sales revenue and order intake are given in constant currencies, unless otherwise stated.)

Underlying EBITDA1) rose overproportionately relative to sales by 23.1% to 421.5 million euros due to economies of scale and to the IFRS 16 Standard required to be applied for the first time in 2019.2) As expected, the respective margin increased to 29.3% from 28.2% in 2018, with around half a percentage point attributable to IFRS 16. Underlying net profit1) after non-controlling interest for the Group was significantly higher than the prior-year figure of 219.3 million euros, reaching 262.9 million euros. Earnings per share1) amounted to 2.85 euros, up from 2.38 euros in fiscal 2018.

Following the further expansion of our workforce in customer facing functions, research and development, as well as operations, the number of employees rose by 10% or 566 people to 6,203.

Key financial indicators

SSB continued to make substantial investments in expanding its global production capacity, even though, as expected, its CAPEX ratio1) decreased upon the completion of several large projects from 14.6% a year earlier to 9.4%. Due to strong operating cash flow and despite the intensive investment activity and successful acquisition, the ratio of net debt to underlying EBITDA1) was 0.3 and hence below the previous year's figure of 0.4. Equity increased from 1,044.9 million euros at year-end 2018 to 1,177.6 million euros as of the reporting date. The equity ratio remained at a very comfortable level of 64.7%, decreasing slightly from 66.5% due to the change in IFRS 16. The SSB Group continues to have a very solid balance sheet and financial position.

Positive outlook for 2020                                         

For fiscal 2020, the management of Sartorius Stedim Biotech anticipates continued profitable growth. Consolidated sales revenue is projected to increase by 11% to 14%, with Biological Industries contributing about two percentage points to this growth. With respect to profitability, the company's underlying EBITDA margin1) is expected to rise to 29.5%. The CAPEX ratio1) is projected to be around 8% (previous year: 9.4%).

The above forecast does not consider the acquisition of select Danaher life science platform business, which was announced on October 21, 2019, and is currently undergoing antitrust clearance. Following the closing of this transaction, presently expected around the end of the first quarter of 2020, management will adjust its full-year guidance accordingly.

All forecasts are based on constant currencies, as in the past years.