Sorin Group second quarter revenues increase 0.6% to €191.9 million

Sorin Group:

Consolidated results for second quarter 2011:

Revenues of €191.9 million, a 0.6% increase (-2.9% as reported) over the same period last year;

Gross profit of €114.4 million, 59.6% of revenues (59.4% in the second quarter of 2010);

EBITDA of €35.1 million, 18.3% of revenues (16.2% in the second quarter of 2010);

Net profit up 54.4% to €17.1 million, 8.9% of revenues (5.6% in the second quarter of 2010).

Consolidated results for first half 2011

• Revenues of €374.1 million, a 2.6% increase (1.1% as reported) over the same period last year;
• Gross profit of €222.5 million, 59.5% of revenues (58.8% in the first half of 2010);
• EBITDA of €62.6 million, 16.7% of revenues (15.4% in the first half of 2010);
• Net profit up 66.8% to €29.9 million, 8.0% of revenues (4.8% in the first half of 2010).

Net financial debt down to €101.7 million as of June 30, 2011, compared to €171.2 million at the end of the same period last year (€115.8 million as of March 31, 2011).

For the third quarter 2011, Sorin Group (MIL:SRN) expects revenues to be substantially flat over the same period last year and a net profit of €10-12 million.

For the full year 2011 guidance, the Company expects to exceed the high-end of its net profit guidance, while 2011 revenues are expected to be at the low-end of the guidance range.

At a meeting today chaired by Rosario Bifulco, Sorin S.p.A. Board of Directors approved the results for the first half of 2011.

"In the first half of 2011, Sorin Group over-achieved its profit and cash flow objectives thanks to its rigorous operational discipline. In the second quarter of 2011, the excellent performance of the Cardiopulmonary business unit allowed us to counterbalance the difficult market conditions in Cardiac Rhythm Management" stated Sorin's Chief Executive Officer, André-Michel Ballester, "Although revenue growth will be challenging in the third quarter, we believe we are well positioned to achieve our operating goals in 2011, thanks to the favorable impact of new product launches during the final part of the year. We continue to focus on our long-term growth acceleration strategy through the execution of specific technology and geographic expansion initiatives".

Consolidated results for the second quarter of 2011

For the second quarter of 2011, Sorin Group posted revenues of €191.9 million. This represents an increase of 0.6% (-2.9% as reported) over the same period last year driven by the performance of the Cardiopulmonary and Heart Valves Business Units which offset a soft performance in the Cardiac Rhythm Management Business Unit.

• The Cardiopulmonary Business Unit (heart-lung machines, extra-corporeal and autotransfusion blood circulation systems) reported revenues of €86.8 million representing growth of 5.9% over the same period last year. This result is attributable to the strong performance of the heart-lung machines business, which increased market share in both emerging markets and the United States. The oxygenator business performed well during the quarter, mainly in emerging markets and in the United States, also thanks to the successful completion of Gish integration. The autotransfusion business grew significantly, particularly in Europe, driven by the successful launch of the new Xtra^TM system. The Group's commitment to innovation continues in 2011, with the development of LinOx, the new line of oxygenators. The Company expects to receive the CE mark for LinOx during the fourth quarter of the year.

In July 2011, Sorin Group purchased a cannulae product line, with annual revenue of approximately USD 3 million, from the US company Estech. These cannulae products support both minimally invasive and traditional cardiac surgery procedures. This transaction strengthens Sorin's market positioning in the cannulae segment and further consolidates its relationship with cardiac surgeons worldwide. This acquisition follows the agreement, closed by Sorin Group in April 2011, for the exclusive distribution of Calmed's entire product portfolio (cannulae, catheters and accessories for cardiac surgery) in the United States and in Europe.  

Gross profit in the second quarter of 2011 was €114.4 million, or 59.6% of revenues compared to 59.4% in the second quarter of 2010. The positive effects from the ongoing efforts to reduce production costs have been partially offset by a less favorable product mix and the negative impact of foreign-exchange rates.

Selling, general and administrative (SG&A) expenses were €70.7 million, and declined to 36.9% of revenues, compared to 39.9% in the second quarter of 2010. This sharp reduction is due to financial discipline and positive impact of hedging.

Research and development (R&D) expenses rose by 4.8% to €18.0 million, or 9.4% of revenues (compared to 8.7% in the second quarter of 2010).

EBITDA rose by 10.0% to €35.1 million (18.3% of revenues), compared to €31.9 million (16.2% of revenues) for the second quarter of 2010.

EBIT was €24.9 million (13.0% of revenues), rising by 14.6% over the €21.7 million (11.0% of revenues) reported for the second quarter of 2010. EBIT before special items totalled €25.6 million, or 13.4% of revenues (10.8% of revenues in the second quarter of 2010).

Net financial charges declined to €0.8 million from €4.8 million in the second quarter of 2010. This item was impacted by one-time foreign-exchange gains of €1.7 million in the second quarter 2011 compared to foreign-exchange losses of €1.8 million in the same period of 2010. On a run rate basis, net financial interest decreased by €0.5 million thanks to the reduction of average net debt for the period and a lower spread applied to medium/long-term debt.

Net profit was €17.1 million, or 8.9% of revenues, a 54.4% increase compared to €11.1 million, or 5.6% of revenues, for the second quarter of 2010.

Net financial debt as of June 30, 2011 was down to €101.7 million, compared to €115.8 million as of March 31, 2011 and €171.2 million as of June 30, 2010, despite a significant deterioration in the collection cycle particularly in Spain. The reduction in net debt during the past 12 months amounted to €69.5 million. Special items contributed positively by €24.4 million (see details in the attached table).

Sorin Group has executed the voluntary full prepayment of the outstanding syndicated facility provided by Mediobanca, Intesa San Paolo, MCC and BNP Paribas, for a total amount of € 12.4 million (€ 10,6 million related to the Euro denominated facility and USD 2.6 million for the USD denominated facility).

Consolidated results for the first half of 2011

In the first half of 2011, Sorin Group posted revenues of €374.1 million, an increase of 2.6% (1.1% as reported) over the same period last year.

Gross profit rose by 2.3% to €222.5 million equal to 59.5% of revenues, versus 58.8% for the first half of 2010. The improvement is due to manufacturing cost reduction initiatives, partially offset by a less favorable product mix.

Selling, general and administrative (SG&A) expenses were €144.5 million, down 2.6% to 38.6% of revenues, compared to 40.1% for the first half of 2010, reflecting continuous financial discipline and positive results on hedging.

Research and development (R&D) expenses grew 7.6% to € 35.1 million, or 9.4% of revenues (8.8% in the first half of 2010).

EBITDA was €62.6 million (16.7% of revenues), rising by 10.2% compared to the €56.8 million (15.4% of revenues) reported for the first half of 2010.

EBIT was to €45.9 million (12.3% of revenues), with 24.9% growth compared to the €36.8 million (9.9% of revenues) for the first half of 2010. EBIT before special items amounted to €42.9 million, or 11.5% of revenues (9.9% of revenues in the first half of 2010).

Net financial charges totalled €3.6 million versus €7.8 million for the first half of 2010; the improvement is mainly attributable to a reduction in average net debt and one-time foreign-exchange gains.

Net profit was €29.9 million, or 8.0% of revenues, a 66.8% increase compared to €17.9 million, or 4.8% of revenues, for the first half of 2010.

Guidance for the third quarter of 2011

For the third quarter 2011, Sorin Group expects revenues to be substantially flat over the same period last year and a net profit of €10-12 million.

Guidance for the full year of 2011

The Company expects to exceed the high-end of its net profit guidance°, thanks to its continuous commitment to financial discipline; while 2011 revenues are expected to be at the low end of the indicated guidance°, in light of the current weakness of the CRM market.