SORIN GROUP ANNOUNCES STRONG SECOND QUARTER 2009 RESULTS AND INCREASES FULL YEAR GUIDANCE
Q2 09 Results highlights:
- Consolidated revenues at € 181.5 million, up 9.8% (4.9% at constant exchange rates) versus Q2 08;
- EBITDA at € 25.9 million (14.3% of revenues), up 25.4% versus Q2 08;
- Net Earnings at € 11.1 million (6.1% of revenues).
H1 09 Results highlights:
- Consolidated revenues at € 350.0 million, up 10.4% (5.7% at constant exchange rates) versus H1 08;
- EBITDA at € 48.5 million (13.8% of revenues), up 27.6% versus H1 08;
- Net Earnings at € 13.9 million (4.0% of revenues).
Net Debt as of June 30, 2009 down to € 209.8 million versus€ 238.6 million on March 31, 2009 (€ 270.3 million on June 30, 2008).
Full Year guidance for 2009 revised upward: Net sales growthat 3-4%*, EBITDA margin at 13.5-14%, Net profit at € 14-18 million andNet Debt not higher than € 205 million. In Q3 2009 sales are expectedto grow by 3-4%*.Notwithstanding a weak seasonality, EBITDA margin is expected to be at11.5%-12.0%, Net Earnings to be positive and Net Debt at € 220 million.
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Pursuant to IFRS 5, thefirst half 2008 results have been reclassified to ensure compatibilityof data following the sale of the Vascular Therapy and Renal CareBusiness Units in 2008.
Milan, July 30, 2009 – The Board of Directors of Sorin S.p.A., meeting today under the Chairmanship of Rosario Bifulco, approved results for the First Half of 2009.
“In the second quarter we continued to exceed all our short termfinancial targets. These results validate our long-term business modelbased on strict financial discipline combined with an increased focuson innovation”, said Chief Executive Officer André-Michel Ballester.
Results for second quarter 2009
In the period, Sorin Group posted Revenues of € 181.5 million,up 9.8% (4.9% at constant exchange rates) from € 165.2 million in thesecond quarter 2008. Key drivers of this performance include robustgrowth in the Japanese and North American markets and the positivesales performance of the CRM business unit.
- The Cardiopulmonary Business Unit (Heart-lung machines, extra-corporeal and autotransfusion blood circulation systems) posted revenues of € 81.1 million,up 0.6%* compared with the same quarter last year. The recentlyacquired activities in the Endoscopic Vessel Harvesting (EVH) businessreported solid quarterly results, which more than offset the results ofthe other product lines. Sales of Heart-lung machines were down 1.1%*at € 14 million, Oxygenators and Autotransfusion products were down1.0%* and 3.0%* at € 51 million and € 15 million, respectively, due toa moderate slowdown in open-heart procedures globally. The BusinessUnit will continue to leverage on its technological know-how and 30years leading market position, as well as on the positive integrationof adjacent segments of business. In June, Sorin Group announced thedelivery of the 1000th S5 heart-lung machine to the Mount Sinai MedicalCenter, one of the world’s leading centers for cardiovascular medicine,based in New York.
- The Cardiac Rhythm Management Business Unit (implantable devices to manage cardiac rhythm disorders) posted revenues of € 67.4 million,with a 9.5%* growth compared with the same period in 2008, helped inparticular by strong revenue growth in Japan, North America and in keyEuropean countries. Sales in the High Voltage segment (OvatioTM andParadymTM defibrillators) rose 7.4%*to € 20 million, whilst in the Low Voltage segment (SymphonyTM,ReplyTM, EspritTM and FacilTM families of pacemaker) sales grew 12.6%*to € 45 million. In the second quarter, the company announced theEuropean commercial market release and first implantation of itsnew-generation ParadymTM DR 8550 dual chamber implantablecardioverter-defibrillator (ICD), the second product from its newplatform with cutting-edge performance. Furthermore, the companyannounced the approval, by the competent authority, to market the Reply™family of dual and single chamber rate-adaptive pacemakers in Canada,and the authorization to market the new Facil™ single and dual chamberrate responsive pacemakers on the Japanese market. The Business Unit isexpected to continue to grow at mid to high single digit in H2 09.
- The Heart Valves Business Unit (mechanical and tissue heart valves, and valve repair products) posted revenues of € 31.9 million,up 8.4%* compared with the same quarter in 2008. Despite the constantmarket trend towards biological valves, the mechanical valves segmentsales increased 2.8%* to € 18 million. Revenues in the tissue heartvalves segment grew 17.2%* to € 12 million driven by the continuedexpansion of the MitroflowTM valve in the US. Enrolment in theminimally invasive“Perceval STM” aortic tissue heart valve CE markclinical trial continues to progress on schedule. In the secondquarter, the company announced the conclusion of a long-term strategicpartnership with Japan Lifeline for the exclusive distribution ofSorin’s complete heart valve and valve repair portfolio in Japan. TheBusiness Unit is expected to continue to capture shares particularly inthe tissue heart valve segment.
Gross Profit grew 9.7% to € 98.6 million, 54.4% ofrevenues (€ 89.9 million, 54.4% in Q2 08). The company expects grossmargin in the coming quarters to expand driven by the positive impactfrom the manufacturing cost reduction programs in progress and from animproved revenue mix.
Selling, General and Administrative (S,G&A) expenses continue their trend downwards to 37.7% of revenues (€ 68.4 million) from 38.4% in Q2 08 (€ 63.4 million).
Research and Development (R&D) represent 8.1% of revenues (€ 14.6 million), from 8.4% in Q2 08 (€ 13.9 million).
EBITDA showed a robust 25.4%growth to € 25.9 million (14.3% of revenues) compared with € 20.6million (12.5% of revenues) in Q2 08, thanks to leveraged sales growthand improved structural costs.
EBIT amounted to € 17.5 million (9.6% of revenues)compared with € 21.1 million (12.8% of revenues) in Q2 08. Beforespecial items, EBIT grew 23.4% to € 15.6 million (8.6% of revenues)compared with € 12.7 million (7.7% of revenues) in Q2 08. An analysisof special items is provided in the attachments.
Net Earnings were € 11.1 million (6.1% ofrevenues) versus € 15.0 million in Q2 08. Net earnings before specialitems and discontinued operations were € 10.9 million, up 24.3% from €8.8 million posted in the same period last year.
Results for first half 2009
In the first half of 2009 Sorin Group posted Revenues of € 350.0 million, up 10.4% (5.7% at constant exchange rates) compared with € 316.9 million in the first half of 2008.
Gross Profit grew 11.3% to € 192.7 million, or 55.0% of revenues (€ 173.1 million, or 54.6% in the first half of 2008).
Selling, General and Administrative (S,G&A) expenseswere down to 38.7% of revenues (€ 135.4 million) compared with 39.8% inthe first half of 2008 (€ 126.2 million).
Research and Development (R&D) expenses were € 29.0 million, or 8.3% of revenues (8.4% in the first half 2008).
EBITDA grew 27.6% to € 48.5 million (13.8% of revenues) compared with € 38.0 million (12.0% of revenues) in the first half of 2008.
EBIT grew 4.6% to € 30.1 million (8.6% of revenues)compared with € 28.8 million (9.1% of revenues) in the first half of2008. Before special items, EBIT grew 39.1% to € 28.3 million (8.1% ofrevenues) compared with € 20.3 million (6.4% of revenues) in the firsthalf of 2008.
Net Earnings rose to € 13.9 million (4.0% ofrevenues) compared with € 14.4 million in Q2 2008. Net earnings beforespecial items and discontinued operations were € 14.2 million, up 73.3%from € 8.2 million posted in the first half of 2008.
Net Debt as of June 30, 2009 fell to € 209.8million, compared with € 238.6 million on March 31, 2009 and € 270.3million on June 30, 2008. The strong cash generation came mainly fromoperating activities (improved profitability and more efficient workingcapital management).
Thanks to the ratchet mechanism applied to the Company’s medium andlong term credit agreements, the deleverage of the balance sheet willtrigger a reduction in the cost of debt of more than 30 basis points,effective as of July 1st 2009.
Full Year guidance for 2009 revised upward: Netsales growth at 3-4%*, EBITDA margin at 13.5-14%, Net profit at € 14-18million and Net Debt not higher than € 205 million. In Q3 2009 salesare expected to grow by 3-4%*.Notwithstanding a weak seasonality, EBITDA margin is expected to be at11.5%-12.0%, Net Earnings to be positive and Net Debt at € 220 million.
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The Board of Directors has taken note that on June 26,2009 Paolo Braghieri, Michele Cappone, Sandro Marco De Poli andGabriele Casati, appointed by the Shareholder’s Meeting for thethree-year period 2009-2011 on the basis of the minority list presentedby Bios Interbanca S.p.A., have resigned their positions as Boardmembers, pursuant to application of a new internal policy of InterbancaS.p.A. - whose control was transferred from Banco Santander SA to GECorporate Financial Services Italia Srl - which does not permit theparticipation of its representatives in boards of directors of publiclytraded companies in which Interbanca does not hold a majority stake.The Sorin S.p.A. Board of Directors has resolved to start the processof selection of potential candidates to the role of Directors, toreplace the members which resigned their positions and to appoint PaoloBaessato, Independent Director, in replacement of Michele Cappone asmember of the Internal Control Committee.
The manager responsible for preparing the company’s financialreports, Demetrio Mauro, declares, pursuant to paragraph 2 of Article154 bis of the Consolidated Law on Finance, that the accountinginformation contained in this press release corresponds to the documentresults, books and accounting records.
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This press release contains forward-looking statements. Thesestatements are based on the Group’s current expectations andprojections about future events and, by their nature, are subject toinherent risks and uncertainties. They relate to events and depend oncircumstances that may or may not occur or exist in the future, and, assuch, undue reliance should not be placed on them. Actual results maydiffer materially from those expressed in such statements as a resultof a variety of factors, including: continued volatility and furtherdeterioration of capital and financial markets, changes in commodityprices, changes in general economic conditions, economic growth andother changes in business conditions, changes in government regulation(in each case, in Italy or abroad), and many other factors outside ofthe Group’s control.
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About the Sorin Group
Sorin Group (www.sorin.com) is a global company and a leader in thetreatment of cardiovascular diseases. The company develops,manufactures and markets medical technologies for cardiac surgery andfor the treatment of cardiac rhythm disorders.
With 3,500 employeesworldwide, the Group focuses on three major therapeutic areas:cardiopulmonary bypass (extracorporeal circulation and autotransfusionsystems), cardiac rhythm management, and heart valve repair andreplacement. Each year, over 1 million patients are treated with thedevices of Sorin Group in more than 80 countries.
For more information, please visit: www.sorin.com or contact: