2011 SECOND QUARTER RESULTS: 54% INCREASE IN NET PROFIT
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 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.
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Milan, July 29, 2011– 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 XtraTM 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.
• The Cardiac Rhythm Management Business Unit (implantable devices to manage cardiac rhythm disorders) posted revenues of €72.8 million, a decrease of 6.1%* over the same period last year. This performance was driven by a global market slowdown that was not compensated by significant new product launches in the first half of the year. The development of the Remote-Monitoring systemand of the SonR technology for optimizing cardiac resynchronization therapy continued during the quarter, with the CE marks expected during the fourth quarter of 2011. These new products will drive revenue growth in the fourth quarter.
• The Heart Valve Business Unit(mechanical, tissue and sutureless heart valves, and valve-repair products) reported revenuesof €31.7 million, an increase of 3.7%*compared to the same period last year. Mechanical valve revenues increased by 4.3%*, driven by strong growth in emerging markets, which more than offset the continued shift of the market to biological valves. Despite a challenging environment in Europe, biological valve revenues rose by 1.3%, mainly thanks to the performance of MitroflowTM in the United States and the positive contribution of the new PercevalTM sutureless biological valve. In the second half of 2011 the Business Unit will benefit from the launch of the new generation of Mitroflow valve with Phospholipid Reduction Treatment (CE mark obtained in July 2011) and from the expansion of the Perceval line to include the 25mm valve size (CE mark expected by the end of 2011).
(*) Calculated at constant exchange rates for 2011 and excluding changes to the perimeter. For details, see attached table.
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.
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The corporate officer responsible for the company’s financial reports, Demetrio Mauro, declares, pursuant to Paragraph 2 of Article 154-bis of the Consolidated Law on Finance that the accounting information contained in this press release corresponds to the documented results and the accounting books and records.
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In addition to the conventional indicators recommended by the IFRS, this press release provides alternative performance indicators. These indicators should not be considered as replacements for the conventional indicators recommended by the IFRS, but rather as an additional source of information, representative of the income statement, balance sheet and financial position parameters used internally in the decision-making process. An explanation of the meaning and structure of these alternative performance indicators is provided in the financial statements at December 31, 2010
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This press release contains forward-looking statements. These statements are based on the Group’s current expectations and projections about future events and, by their nature, are subject to inherent risks and uncertainties. They relate to events and depend on circumstances that may or may not occur or exist in the future, and, as such, undue reliance should not be placed on them. Actual results may differ materially from those expressed in such statements as a result of a variety of factors, including: continued volatility and further deterioration of capital and financial markets, changes in commodity prices, changes in general economic conditions, economic growth and other changes in business conditions, changes in government regulation (both in Italy and abroad), and many other factors, most of which are outside of the Group’s control.
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About Sorin Group
Sorin Group (www.sorin.com) is a global company and a leader in the treatment of cardiovascular diseases. The company develops, manufactures and markets medical technologies and innovative therapies for cardiac surgery and for the treatment of cardiac rhythm disorders. With 3,700 employees worldwide, the Group focuses on three major therapeutic areas: cardiopulmonary bypass (extra-corporeal circulation and autotransfusion systems), cardiac rhythm management, and repair and substitution of heart valves. Each year, over one million patients are treated with the devices of Sorin Group in more than 80 countries.
For further information, visit: www.sorin.com, or contact:
Director, Corporate Communications
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