Sartorius boss tempers growth ambitions

Goettingen, Germany - Sartorius CEO and chairman Dr. Joachim Kreuzburg, does not expect the process and laboratory technology group to reach its full-year growth targets, despite forecasting  that second-half sales and earning for it's two divisions - Sartorius Stedim Biotech and Sartorius Mechatronics - would increase above the first-half figures.

For Sartorius Stedim Biotech, the company projects that the growth rate will be higher in the second half than in the first, whereas for Sartorius Mechatronics, it is anticipated that slower economic activity will slightly dampen its pace of growth, said Kreuzburg.

"For both divisions, profitability in the second half should be higher than in the first.. Yet because of the current uncertainties about the US biotechnology market and the economic climate, it is not possible at this time to give a precise, quantitative forecast," the company boss explained.

Kreuzburg was commenting in the group's first-half results statement, which showed that from January to June the group posted sales revenue of Euro304.0 million, corresponding to a currency-adjusted gain of 3.8% and earnings (EBITA) of Euro27.0 million, compared with Euro28.9 million a year ago.

The group's Biotechnology Division achieved good growth in Europe, helped by integration of Stedim SA. In the US market, however, sales fell on weaker demand of individual key accounts in the biopharmaceutical sector. These accounts had to accept delayed or restricted drug approvals and so manufactured considerably fewer medications than they had originally planned in some instances, while some customers moved to reduce inventory, noted Sartorius.

Sales revenue for the biotech division, at Euro184.1 million, corresponded to a currency-adjusted increase of 2.8% or -1.3% at the current exchange rates, while, order intake dipped to Euro187.1 million from Euro198.3 million a year earlier. EBITA dropped to Euro20.4 million, compared to Euro21.3 million a year ago. The biotechnology unit is focused on fermentation, filtration, purification, fluid management and laboratory applications.

"Our strong growth in Europe shows that following successful integration, Sartorius Stedim Biotech has positioned itself very well in the market," commented Kreuzburg. ³"n the USA, we were not immune to the effects elicited by the temporary weakness of the biotech markets, but we handled this challenge very well. By achieving a double-digit EBITA margin, we are continuing to perform at a very solid earnings level."

First-half sales revenue for the Mechatronics Division rose by a currency-adjusted rate of 5.5% to Euro119.9 million, helped by growth in Asia and Europe. On a currency-adjusted basis, the division increased order intake, which was up a currency-adjusted 2.7%. Operating earnings at Euro6.6 million compared with Euro7.7 million a year ago.

"In the first half, Sartorius Mechatronics grew robustly. However, its strong first-quarter order intake did not continue on into the second quarter because of the weakening global economic activity. In the second half, we will be especially focusing on further implementing our growth strategy in Asia and on improving our earnings level," said Kreuzburg.

Goettingen-based Sartorius is an international laboratory and process technology provider covering the segments of biotechnology and mechatronics. In 2007, the technology group earned pro forma sales revenue of Euro622.7 million. The company currently employs approximately 4,500.

In the mechatronics segment, the company primarily manufactures equipment and systems featuring weighing, measurement and automation technology for laboratory and industrial applications. Key Sartorius customers are from the pharmaceutical, chemical and food and beverage industries and from numerous research and educational institutes of the public sector.