Despite the difficult market environment, Sartorius posted
slight gains in growth for both Group divisions and robust
earnings. �Given the unexpectedly adverse economic conditions, we
performed well. Amid this situation, we could not reach our
ambitious financial targets for 2008. Yet we still achieved the
third best profitability result in our company�s history,"
commented CEO Dr. Joachim Kreuzburg on the yearly results for 2008
at the annual press conference in Goettingen, Germany. Referring to
the exceptional uncertainty that still surrounds the economic
climate, Dr. Kreuzburg did not provide any specific forecast of the
financial results for 2009. �It is already foreseeable that the
global economic crisis will have a significantly negative impact on
our Mechatronics business in the current year, so we have to expect
that sales revenue and earnings for this sector will decline," said
Dr. Kreuzburg. By contrast, the Biotechnology Division as a
supplier to the biopharmaceutical industry is comparably less
affected by general cyclical trends. �We are targeting sales and
profitability growth for the Biotechnology Division.� The mid- and
long-term business prospects for both divisions continue to remain
excellent, as Kreuzburg further stated. In addition to focusing on
systematic cost management, in 2009 we will be launching a large
number of innovative products that truly add value for our
customers."
Key data on fiscal 2008
The Group slightly increased its sales revenue in 2008 by a
currency-adjusted 0.9% to 611.6 million euros (current exchange
rates: -1.8%). Order intake on a currency-adjusted basis was up
1.6% to 609.8 million euros and is thus slightly above the previous
year�s level (current exchange rates: -1.1%). Consolidated earnings
declined due to the overall weak market environment and the effects
of unfavorable exchange rates compared with a year ago, but
continued to remain at a solid level: twelve-month operating
earnings (EBITA = earnings before interest, taxes and amortization)
stood at 56.8 million euros (2007: 71.1 million euros); the
corresponding EBITA margin was 9.3% (2007: 11.4%). Net profit was
impacted, among other things, by extraordinary expenses for foreign
currency hedging transactions. Excluding both non-cash items of
amortization and interest expense for share price warrants, net
profit was at 18.2 million euros, compared with 30.4 million euros
a year ago.
Business development of the divisions
Sartorius Stedim Biotech
In 2008, the Biotechnology Division performed well in an
exceptionally adverse market environment. In North America the
division, just like its competitors, had to grapple with the
temporary downturn in demand from a few key accounts as a result of
their scale-backs in production and reductions in inventory. This
resulted in a drop-off in orders from pharmaceutical suppliers,
especially in the first half, whereas during the fourth quarter the
North American market environment began showing signs of recovery.
On the whole, the division�s sales revenue of 366.0 million euros
in constant currencies was approximately at the year-earlier level
(+0.2%; current exchange rates: -2.6%).
In Europe, the Biotechnology Division�s growth was largely
fueled by business with disposable products for biopharmaceutical
applications. For instance, innovative single-use bioreactors were
much in demand. In Asia, Sartorius Stedim Biotech reported flat
sales growth on the whole.
In the course of 2008, the division received orders worth 367.1
million euros, up 3.0% on a currency-adjusted basis (current
exchange rates: 0.0%). While positive growth impulses came from
Europe and Asia, order intake in North America slid due to the
market situation there, but then showed an upward trend in the
fourth quarter.
The Biotechnology Division achieved operating earnings (EBITA)
of 39.7 million euros in fiscal 2008 (2007: 49.7 million euros).
Business with single-use products contributed by far the largest
share of earnings. Reported at an EBITA margin of 10.9%, the
profitability of Sartorius Stedim Biotech continued to remain very
solid (2007: 13.2%). This decrease in margin from a year ago
essentially resulted from the sales decline in North America and
the negative exchange rate impact.
Sartorius Mechatronics
For the first three quarters of 2008, Sartorius Mechatronics
reported encouraging gains of more than 5% on a currency-adjusted
basis in both order intake and in sales revenue, and thus remained
initially unaffected by the emerging economic crisis. In November
and December 2008, however, the division received significantly
fewer orders for laboratory instruments and industrial weighing and
control equipment as a consequence of the global economic downturn,
which was reflected by a drop in revenue in some of its segments at
year-end. By contrast, the division�s service business showed
overall positive development throughout the entire fiscal year. At
242.7 million euros, full-year order intake for 2008 was down 0.5%
on a currency-adjusted basis from the year-earlier figure (current
exchange rates: -2.8%). Sales revenue rose 1.8% (currency-adjusted)
and stood at 245.6 million euros (current exchange rates:
-0.5%).
When viewed regionally, the cyclical downturn hit North America
first so sales with mechatronics products fell in that region, also
on a full-year basis. For Europe, by contrast, the division posted
slight gains and for Asia, significant increases, as the first
three quarters were on track.
The division�s operating earnings (EBITA) fell from 21.3 million
euros to 17.1 million euros; at year-end, the corresponding EBITA
margin was at 7.0% compared with 8.6% a year earlier. This decline
was due to the sharp economic downturn and the negative exchange
rate impact as well as the higher expenses budgeted for research
and development.
Key balance sheet ratios and financials at a solid
level
Key ratios and financials for the Group were at a good level:
the consolidated equity ratio was 38.5% (Dec. 31, 2007: 42.6%) and
the ratio of net debt to EBITDA was 2.7. The financing package
concluded in September 2008 and totaling an aggregate of 400
million euros has placed the company�s financing on a broad-based,
long-term footing.
Research and development strengthened
In fiscal 2008, Sartorius further intensified its R&D
activities and increased its spending on R&D by 10.0% to 43.9
million euros (2007: 39.9 million euros). The rise in R&D costs
can be attributed essentially to the build-up of scientific staff.
The ratio of R&D costs to sales revenue rose accordingly and
was at 7.2%, up from 6.4% a year ago.
Number of employees increased
As of December 31, 2008, the Sartorius Group employed 4,660
people, 142 persons or 3.1% more than in the previous year. In
Europe, the number of employees rose 5.4% to 3,151 persons. Of this
total, 2,339 worked in Germany overall and 1,829 at the company�s
headquarters in Goettingen, Germany. In
Asia�|�Pacific, the workforce increased 8.7% to 898
people, whereas in North America, the number dropped 11.8% to 540
employees.
Dividend proposal
At the Annual Shareholders� Meeting on April 23, 2009, the
Supervisory Board and the Executive Board will submit a proposal
for payment of dividends of 0.42 euro per preference share and 0.40
per ordinary share (previous year: 0.68 euro and 0.66 euro,
respectively). At nearly the same dividend payout ratio as the
previous year's, the total profit distributed would decrease from
11.4 million euros a year earlier to 7.0 million euros, if this
proposal is approved.
Outlook
Given the high uncertainty surrounding global economic
development, Sartorius still does not think it possible to issue a
reliable forecast about how its business will evolve in 2009.
As experience has shown, the growth potential for the
Mechatronics Division, which predominantly manufactures capital
goods, is significantly affected by the economic climate. Because
sales revenue for this division has been declining since the end of
2008, Sartorius has implemented extensive programs designed to
swiftly cut costs and strengthen cash flow. These programs entail a
temporary reduction in workhours and salaries for some 950
employees of the Mechatronics Division and administrative staff at
the Goettingen and Hamburg, Germany, sites. As company management
expects its Mechatronics Division to face very difficult market
conditions throughout 2009, it anticipates that sales revenue and
earnings in this division will decline in the current fiscal year.
By contrast, the Biotechnology Division as a supplier to the
pharmaceutical industry is usually less affected by general
cyclical trends as the company has experienced so far. For this
reason, company management plans for growth in sales revenue and
earnings for this division.
In both divisions, Sartorius will focus in the current year on
launching a number of important product innovations. For instance,
the Mechatronics Division will be unveiling its new Cubis series of
premium user-configurable lab balances, which set new benchmarks in
laboratory weighing technology. The Biotechnology Division will
expand its offer particularly in integrated single-use systems and
introduce new process-scale single-use mixing systems and
bioreactors as well as a number of new types of membrane filter on
the market, among other products.
Current image files:
Dr. Joachim Kreuzburg, CEO and Executive Board Chairman of
Sartorius AG:
http://www.sartorius-stedim.com/media/content/press/support/Dr_Kreuzburg.jpg
Sartorius Stedim Biotech: (STR)
http://www.sartorius.com/media/content/press/support/Biotech_AR_2008.jpg
Sartorius Mechatronics: (CUBIS)
http://www.sartorius.com/media/content/press/support/Mechatronics_AR_2008.jpg
Upcoming Financial Dates:
April 23, 2009 Annual Shareholders� Meeting in Goettingen,
Germany
April 2009 Publication of first-quarter figures (Jan. � March
2009)
This is a translation of the original German-language press
release. Sartorius shall not assume any liability for the
correctness of this translation. The original German press release
is the legally binding version. Furthermore, Sartorius reserves the
right not to be responsible for the topicality, correctness,
completeness or quality of the information provided. Liability
claims regarding damage caused by the use of any information
provided, including any kind of information which is incomplete or
incorrect, will therefore be rejected.
A Profile of Sartorius
The Sartorius Group is a leading international laboratory and
process technology provider covering the segments of biotechnology
and mechatronics. In 2008, the technology group earned sales
revenue of 611.6 million euros. Founded in 1870, the
Goettingen-based company currently employs approximately 4,600
persons. The major areas of activity in its biotechnology segment
focus on filtration, fluid management, fermentation, purification
and laboratory applications. In the mechatronics segment, the
company primarily manufactures equipment and systems featuring
weighing, measurement and automation technology for laboratory and
industrial applications. Key Sartorius customers are from the
pharmaceutical, chemical and food and beverage industries and from
numerous research and educational institutes of the public sector.
Sartorius has its own production facilities in Europe, Asia and
America as well as sales subsidiaries and local commercial agencies
in more than 110 countries.
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