FINAL RESULTS FOR 2011 CONFIRM PRELIMINARY FIGURES PUBLISHED ON FEBRUARY 9, 2012
Consolidated results for 2011:
- Revenues of €743.4 million, a 1.0%* increase (-0.3%as reported) over 2010;
- Gross profit of €447.6 million, 60.2% of revenues (58.9% in 2010);
- EBITDA of €128.7 million, 17.3% of revenues (16.1% in 2010);
- Net profit up 48.5% to €58.0 million, 7.8% of revenues (5.2% in 2010).
Net financial debt down to €105.9 million as of December 31, 2011, compared to €128.8 million as of December 31, 2010.
For 2012, the Company forecasts consolidated revenue growth of 2-4%* and a net profit increase of 5–10% over 2011. For the first quarter of 2012, the Company forecasts revenue growth of 1 –2%* over the same period last year.
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Milan, 15 March 2012– At a meeting held today and chaired by Rosario Bifulco, the Sorin S.p.A. Board of Directors approved the Draft of the 2011 Financial Statements.
“2011 final data are fully in line with the preliminary figures published on February 9, 2012. 2011 was a challenging year for the top line, particularly in CRM. In contrast, the Company strengthened its global leadership position in Cardiopulmonary and was able to significantly grow its net profit by around 48%. In 2012 we are committed to continue sustaining our longer-term growth strategy with further geographic expansion initiatives and additional investments in innovation”, stated Sorin Group's Chief Executive Officer André-Michel Ballester.
CONSOLIDATED RESULTS FOR 2011
In 2011, Sorin Group reported revenues of €743.4 million, up 1.0%*(-0.3% as reported) compared to 2010.
The Cardiopulmonary Business Unit posted revenues of €344.9 million, a 4.2%* increase over 2010. This performance, the highest revenue growth of the past five years, reflects the strong contribution of the emerging markets. The growth was led by the heart-lung machines segment which had outstanding performance in all of the main markets and by the autotransfusion business, thanks to the commercial success of XtraTM. The oxygenator segment performed well, mainly in the emerging markets and in the United States, where it benefitted from the integration of Gish Biomedical during the first part of the year. In the fourth quarter the Company obtained CE mark for the first InspireTM adult model. In 2012 Sorin will roll-out this new and innovative range of oxygenators on a global basis.
The Cardiac Rhythm Management Business Unit reported revenues of €277.5 million, a 2.9%* decrease compared to 2010. The high-voltage segment reported a revenue decline mainly due to a global market slowdown and the absence in the first nine months of significant new product launches for the Company in the cardiac resynchronization therapy (CRT) segment. With the European commercial launch of the innovative SonR system in October, Sorin stopped its share erosion in the CRT segment. In the low voltage segment Sorin posted a slight decrease, with a sluggish market trend in the United States and Europe only partially offset by share gains in Japan and in emerging markets.
- The Heart Valves Business Unit reported revenues of €119.0 million, a 1.5%*increase compared to 2010. The mechanical valves segment experienced a slight decrease in revenues in line with the expected and continued shift of the market to tissue values. Traditional tissue valves performed positively thanks to the contribution of the new PercevalTM sutureless valve and to the penetration in emerging markets and the United States, which more than offset the slowdown in the European market.
Gross profit rose to €447.6 million, or 60.2% of revenues, compared to 58.9% of revenues in 2010, representing the first year in the Company's history in which gross margin resulted above 60%. The improvement is attributable to the ongoing manufacturing cost reduction programs.
Selling, General and Administrative (SG&A) expenses were €289.7 million, or 39.0% of revenues, compared to 39.4% of revenues in 2010. Net of the impact of hedge accounting, SG&A amounted to 38.8% of revenues compared to 38.0% in 2010. The difference is attributable to a slight increase in selling and marketing expenses for the commercial launch of new products and for geographic expansion initiatives.
Research and Development (R&D)expenses increased by 4.7% to €70.1 million, or 9.4% of revenues, compared to 9.0% in 2010.
EBITDA in 2011 rose by 7.1% to €128.7 million, or 17.3% of revenues, compared to 16.1% of revenues in 2010.
EBIT grew by 22.7% to €87.7 million, or 11.8% of revenues, compared to 9.6% in 2010. EBIT before special items was €87.8 million in 2011 (€78.4 million in 2010).
Net financial charges, including expenses on investments in associates, decreased to €7.6 million from €11.6 million in 2010. On a run rate basis, net financial charges decreased by €1.9 million as a result of lower average debt for the period and a lower spread applied to medium/long-term debt.
Net profit rose by 48.5% to €58.0 million, or 7.8% of revenues, compared to 5.2% of revenues in 2010.
Net financial debt as of December 31, 2011 is down to €105.9 million,compared to €128.8 million as of December 31, 2010 and €122.4 million as of September 30, 2011. Free cash flow°generated in 2011, equal to €37.7 million, is mainly the result of increased profitability, despite significant deterioration of payment terms in Southern Europe.
2011 net debt position was negatively impacted by €14.8 million of special items, including the effect of the difference in fair value of hedging portfolio and business development investments (see attached table for details). Major investments included the acquisition of the Estech cannulae portfolio, the minority investments in MD Start (incubator in the European med-tech sector) and Enopace Biomedical (start-up focused oninnovative solutions for heart failure patients) and a partnership for the development of a new lead portfolio.
Guidance for the current fiscal year
For fiscal year 2012, the Company expects consolidated revenue growth of 2-4%*and net profit growth of 5–10%. For the first quarter of 2012, the Company expects revenues to grow by 1-2%* over the same period of 2011.
The 2012-2016 Strategic Plan will be approved by the Board of Directors on September 20, 2012. The outline of the Strategic Plan will be presented to the financial community during a meeting scheduled for September 24, 2012.
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Results of the parent company, Sorin S.p.A.
The Board of Directors also approved the financial statements of the parent company, Sorin S.p.A., which recorded a net profit of €35.0 million (€10.0 million in 2010), and proposed to allocate the profit to the legal reserve (€1.7 million) and retained earnings (€33.2 million).
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In accordance with Article 144-bis of Consob regulation no. 11971/1991 (Issuer Regulations), Sorin Group announced the conclusion of the share buy-back program authorized by the ordinary Shareholders meeting on September 14, 2010 for a period of 18 months. Such program resulted in the purchase of a total of 3,773,600 Sorin ordinary shares, equivalent to 0.79% of the current share capital, for a total consideration of €6,046,131. These shares are currently held by the Company.
At today's meeting, the Board of Directors approved a resolution pursuant to Articles 2357 and 2357-ter of the Italian Civil Code and Article 132 of Legislative Decree no. 58 of February 24, 1998, to submit a proposal to the shareholders' meeting to be convened, for the authorization of a new plan covering the purchase and disposal of the Company's shares within a period of 18 months from the date of the shareholders’ resolution. The proposed program would allow the purchase, in one or more transactions, on a revolving basis, of up to 10% of the share capital of Sorin S.p.A..
The proposed plan provides for the purpose of stabilizing Sorin’s share price and for the purchase of treasury shares to service existing and future share incentive plans for directors and/or employees and/or associates of Sorin S.p.A. or other companies of the Group.
The Board of Directors proposes that the share price for the purchases may be established from time to time for each transaction, provided that such price may not be higher or lower by 10% than the reference price recorded on the Stock Exchange in the trading session preceding each purchase transaction.
For any other information regarding the proposal, reference should be made to the Report of the Directors drawn up pursuant to Article 73 of the Issuer Regulations.
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Call of the Shareholders' meeting
The draft of the 2011 consolidated financial statements approved by the Sorin S.p.A. Board of Directors will be submitted to the next Shareholders’ meeting convened for April 27, 2012 (first call) and, if necessary, for April 30, 2012 (second call).
The Board of Directors has also approved for submission to the Shareholders' meeting: i) the report on the Management compensation; ii) a new “Long-Term Incentive 2012-2014” plan for directors and employees of Sorin S.p.A. and/or companies controlled by Sorin S.p.A.; iii) a stock grant plan to service the deferral, including partial deferral, and the conversion into shares, of the 2012 annual “Short-Term Incentive” bonus earned by directors and managers with strategic responsibility of Sorin S.p.A. and/or companies controlled by Sorin S.p.A.; and iv) a proposal for the integration and amendment of the “Long-Term Incentive 2009-2013” plan for the benefit of directors and employees of Sorin S.p.A. and/or companies controlled by Sorin S.p.A., as approved by the Shareholders' meeting on September 14, 2010.
The Shareholders' meeting will also be called upon to pass a resolution in relation to the appointment of members of the Board of Directors, subject to the determination of the number of directors for the years of 2012-2014 and the determination of the related directors' fees, as well as a resolution about the proposal for authorization of a plan covering the purchase and disposal of treasury shares, as described above.
In the extraordinary session, the Shareholders will also deliberate on the proposal to confer to the Board of Directors, pursuant to Article 2443 of the Italian Civil Code, for a period of five years from the date of approval, the powers to execute a free share capital increase, in one or more transactions, for a nominal value of up to €10 million, by issuing up to 10.0 million ordinary shares with par value of €1.00 each, to be assigned to employees of Sorin S.p.A. and/or of the companies controlled by Sorin S.p.A., pursuant to Article 2349 of the Italian Civil Code within the framework of each of the aforementioned incentive plans or similar plans that may be approved in the future covering the granting of shares. This resolution will also entail an amendment of Article 5 of the corporate by-laws.
The documentation required by prevailing laws and regulations in relation to the aforementioned matters and in relation to the proposals to be submitted to the Shareholders' meeting will be filed in the period required by law with the registered office of the Company and with Borsa Italiana S.p.A. along with the 2011 consolidated financial statements and the report on corporate governance approved today by the Board of Directors.
The documentation will also be available on the Internet site: www.sorin.com.
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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 document results, books and accounting 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 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 Interim Report on Operations at June 30, 2011.
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This press release contains forward-looking statements. These statements are based on the Company’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 Company’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 over 3,700 employees worldwide, the Company 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
Tel: +33 (0)1 46 01 33 78
Mobile: +33 (0)6 76 12 67 73
Director, Investor Relations
Tel: +39 02 69969716