Sartorius, a leading international laboratory and process equipment provider, successfully closed the first half of 2011, with double-digit growth rates in sales revenue and earnings. "In both Group divisions and in all business regions, we have grown dynamically and profitably," commented CEO Dr. Joachim Kreuzburg on the company's first-half results. "Once again, our Asian business has been the biggest growth driver. We are especially happy about the numbers coming from this region." Looking ahead to the second half of the year, Dr. Kreuzburg expects the outstanding growth rates in the more cyclical Mechatronics Division to gradually return to normal. By contrast, for the Biotechnology Division that generates nearly two-thirds of consolidated revenue, Dr. Kreuzburg projects that growth will continue to remain dynamic.
Based on the company's successful first half, management raised its 2011 full-year guidance for sales revenue and profit. Consolidated sales revenue is thus expected to grow on the basis of constant currencies from 6.4% in 2010 to between 8% and 10% (former guidance: 6% to 8%). The operating margin is forecasted to increase from 13.0% in 2010 to between 14.5% and 15.5% (former guidance: around 14%).
Development of Order Intake and Sales Revenue
In the first half of 2011, Sartorius increased its order intake over the year-earlier period by 13.6% (in constant currencies: +14.6%) to 382.3 million euros. In the same period, sales revenue rose 12.2% (in constant currencies: +13.1%) to 353.7 million euros.
Strong growth was fueled by both Group divisions: The larger Biotechnology Division increased its order volume by 16.2% (in constant currencies: +17.4%) to 257.2 million euros and its sales revenue by 9.7% (in constant currencies: +10.8%) to 229.4 million euros. Especially in demand were single-use products that customers in the pharmaceutical sector use in their production processes, such as special filters and bags, for instance. The Mechatronics Division, which generates around a third of consolidated revenue, also experienced dynamic development. By the end of the first half, its order intake at 125.1 million euros was 8.7% higher than the year-earlier figure (in constant currencies: +9.2%); sales revenue even climbed 17.2% (in constant currencies: +17.6%) to 124.3 million euros. Both of the division's businesses with laboratory instruments and industrial weighing and control equipment, respectively, contributed to this positive development.
The regional pattern shows that Sartorius posted the highest gains in Asia/Pacific, as it had in the previous quarters. There, sales revenue jumped by nearly one-third (+28.7%) to 80.1 million euros as a result and was thus the highest growth region for both Group divisions. For the Biotechnology Division, revenue in Asia/Pacific was up 34.1%; the Mechatronics Division expanded sales there by 22.8%. In Europe as well, business developed dynamically, with sales up 11.9%. The Biotechnology Division contributed 8.8% and the Mechatronics Division 18.2% to this figure. In North America, growth for the six-month period was at 3% (Biotechnology Division: 2.7%; Mechatronics Division: 3.9%; all regional growth rates given in constant currencies).
"Both divisions showed outstanding development in the first half," said Dr. Kreuzburg. "We see that the Biotechnology Division will continue to remain on a stable growth track. For the Mechatronics Division, there is indication that its growth rates will return to normal levels in the second half, once pent-up demand from the rebound has abated. From a regional view, we expect North America to contribute higher growth in the second half than it did in the first half."
Earnings Development
The gain in profit was even stronger than in sales revenue: Operating earnings rose overproportionately in the first half and, at 51.1 million euros, were 40.7% higher than the year-earlier figure. The respective operating EBITA margin improved from 11.5% to 14.4%.
The Biotechnology Division contributed to this increase in earnings, reporting 38.6 million euros, which were up 22.8%. Its margin rose from 15.0% to 16.8%. Earnings for the Mechatronics Division climbed substantially from 4.8 million euros to 12.4 million euros, which represents a gain of 157.5%. Accordingly, the division's EBITA margin also improved significantly, from 4.5% a year ago to 10.0%. This considerable jump in earnings was due to the optimized cost structures of the Mechatronics Division, besides its increase in sales revenue.
Relevant net profit for the period was 24.0 million euros, up from 15.9 million euros a year ago. This profit is calculated by excluding extraordinary items and eliminating non-cash amortization of 3.8 million euros (H1 2010: 3.5 million euros). The corresponding earnings per share were at 1.41 euros, up from 0.93 euro a year earlier.
"In the first half, we again overproportionately increased our earnings. What is especially encouraging is the strong gain in profitability reported by the Mechatronics Division. This development underscores the good market positioning and successful business model of both divisions. Based on our excellent first-half results, we have raised our forecasts for sales revenue and earnings for both divisions and, therefore, for the entire Group," commented Dr. Kreuzburg.
Outlook
According to its guidance now raised, Sartorius expects 2011 full-year sales for both divisions, and thus for the entire Group, to grow 8% to 10% in constant currencies (former guidance: 6% to 8%). At the same time, it projects that the increase in profitability will be stronger. The operating EBITA margin at Group level is forecasted to rise to 14.5% to 15.5% (former guidance: around 14%). The Biotechnology Division is expected to contribute an operating margin of approximately 17% to 18% (former guidance: around 17%) and the Mechatronics Division a margin of around 10% to 11% (former guidance: about 8%) to this result. Furthermore, management continues to anticipate that operating cash flow will be significantly positive.
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