Sartorius with continued growth in a challenging environment

Sartorius closed the first nine months of 2022 in both divisions with double-digit sales revenue and earnings growth and specified its outlook for the current fiscal year.

“In the first nine months, Sartorius achieved significant growth in a challenging environment. Both divisions recorded double-digit sales revenue increases and, despite unfavorable trends on the cost and currency side, very good profit margins. The lab division developed very dynamically, with a particularly positive performance of the bioanalytics business. The development of the bioprocessing business was characterized by significant sales revenue growth and at the same time, as expected, a swift normalization of demand following two years influenced by strong special effects due to the pandemic. We expanded the division’s portfolio with the acquisition of Albumedix, adding an important component for the manufacture of innovative biopharmaceuticals, particularly regarding modalities such as cell therapies, viral therapies and vaccines. We are specifying our full-year outlook for 2022 within the range projected so far, but the global political and economic uncertainties remain high,” said Executive Board Chairman and CEO Joachim Kreuzburg.

Business development of the Group

In the first nine months, Group sales revenue recorded a year-over-year increase of 16.6 percent in constant currencies (reported: +23.2 percent) to 3,113 million euros. This performance was driven by organic growth in both divisions, while acquisitions, as expected, contributed close to 2 percentage points to growth. All three business regions – EMEA, the Americas, and Asia | Pacific – recorded significant growth, with the Americas region posting the strongest gain. The restrictions in China caused by the pandemic as well as business limitations in Russia dampened growth to a limited extend. 

Following an exceptionally strong prior-year figure due to the pandemic, order intake, as expected, declined in the first nine months and reached 3,121 million euros (in constant currencies: -9.5 percent, reported: -5.0 percent). In the Bioprocess Solutions division, in particular, the first nine months of 2021 had been influenced by high demand from vaccine manufacturers and changed ordering patterns by some customers, who had placed orders larger in size and further in advance than usual.

Underlying EBITDA increased by 21.4 percent to 1,051 million euros in the first nine months. The corresponding margin of 33.8 percent was close to the high level of the prior-year period (34.3 percent). This development was positively influenced by economies of scale from sales revenue growth, but diluted by currency effects and, as planned, higher costs resulting from the recruitment of new employees as well as other normalized cost positions. Price effects on the procurement and customer sides largely offset each other.

Relevant net profit reached 501 million euros, representing a significant increase of 23.1 percent from the first nine months of 2021. Underlying earnings were 7.32 euros (prior-year period: 5.94 euros) per ordinary share and 7.33 euros (prior-year period: 5.95 euros) per preferred share.

Key financial indicators

The Sartorius Group continues to have a very sound balance sheet and financial base. Its equity ratio stood at a robust level of 35.4 percent as of September 30, 2022 (December 31, 2021: 30.2 percent), despite the acquisition of Albumedix, which was completed at the end of September 2022. The ratio of net debt to underlying EBITDA was 1.7 as of the reporting date, compared with 1.5 at the end of 2021. Cash flow from investing activities stood at -362 million euros, compared with -254 million euros in the first nine months of 2021. The ratio of capital expenditures (CAPEX) to sales revenue reached 11.3 percent (prior-year period: 9.6 percent).

Increase in the number of employees

As of September 30, 2022, Sartorius had a total of 16,038 employees worldwide, representing a rise in headcount of 2,206 from the end of 2021. Following a significant increase in the first six months of the year, the number of new hires slowed down considerably with the beginning of the second half of 2022, as planned.

Business development of the Bioprocess Solutions division

The Bioprocess Solutions division, which offers a wide array of innovative technologies for the manufacture of biopharmaceuticals and vaccines, achieved sales revenue of 2,471 million euros in the first nine months. This corresponds to a year-over-year increase of 17.7 percent in constant currencies (reported: +24.3 percent) and includes about 2 percentage points of non-organic growth from acquisitions. All business areas recorded double-digit growth, while coronavirus-related business declined significantly from the prior-year period.

Following an exceptionally strong prior-year figure due to the pandemic, order intake, as expected, declined in the first nine months, reaching 2,452 million euros (in constant currencies: -14.4 percent, reported: -10.3 percent). The first nine months of 2021 had been influenced by high demand from vaccine manufacturers and changed ordering patterns by some customers, who had increased the size of their orders and placed them further in advance than usual.

The division’s underlying EBITDA rose by 21.7 percent to 881 million euros. Despite negative currency effects and planned increased costs, the resulting margin of 35.7 percent almost reached the high level of the previous year (36.5 percent) due to positive economies of scale.

Business development of the Lab Products & Services division

Sales revenue of the Lab Products & Services division, which specializes in technologies for life science research and pharmaceutical laboratories, recorded a very dynamic development in the first nine months, climbing by 12.5 percent in constant currencies (reported: +19.0 percent) to 642 million euros. Close to 1 percentage point came from non-organic growth. The bioanalytics product segment expanded particularly strongly. Order intake posted even higher growth than sales revenue, increasing by 14.6 percent in constant currencies (reported: +21.0 percent) to 669 million euros.

The division’s underlying EBITDA rose by 19.8 percent to 170 million euros, and the corresponding margin expanded to 26.5 percent (prior-year period: 26.3 percent). A positive product mix and economies of scale more than compensated for negative currency effects and planned higher costs.

Outlook for fiscal 2022 specified

Based on the results of the first nine months, management specifies its outlook for the current fiscal year. Consolidated sales revenue growth is now expected to be in the lower half of the range of around 15 percent to 19 percent projected so far, with non-organic growth from acquisitions anticipated to contribute about 2 percentage points. Regarding profitability, Sartorius continues to expect its underlying EBITDA margin to reach about 34 percent.

For the Bioprocess Solutions division, the company forecasts sales revenue growth to be in the lower half of the range of about 17 percent to 21 percent projected so far. This includes a non-organic growth contribution from acquisitions of about 2 percentage points. The division's underlying EBITDA margin is still projected to reach about 36 percent. Lab Products & Services is now expected to achieve revenue growth in the upper half of the range of about 6 percent to 10 percent projected so far in 2022, with about 1 percentage point of this coming from the non-organic growth contribution from acquisitions. The division’s underlying EBITDA margin is still expected to be about 26 percent.

The CAPEX ratio is anticipated to be about 14 percent and net debt to underlying EBITDA is now anticipated to be about 1.6 at year end (previously about 1.1) following the closing of the Albumedix acquisition. Possible further acquisitions are not included in this projection.