The pharmaceutical supplier and laboratory equipment supplier is feeling weaker demand.
(Photo: Sartorius)
Frankfurt The laboratory outfitter and pharmaceutical supplier Sartorius achieved lower sales and profits in the first half of the year. Compared to the strong prior-year period due to the corona, sales fell by almost 16 percent to 1.74 billion euros, as the company announced on Friday morning. The operating result (Ebitda) fell by more than a quarter to 517 million euros.
On Friday morning, Sartorius shares were down around 1.7 percent at EUR 260.50. The titles have lost around 18 percent in value this year.
“The first half of the year was characterized throughout by the after-effects of the pandemic. Customers continued to reduce their inventories and were more reluctant to invest due to free capacities,” said CEO Joachim Kreuzburg. Incoming orders shrank by more than a quarter to 1.45 billion euros.
During the corona pandemic, Sartorius benefited from strong demand for its products, which were needed to manufacture Covid vaccines and medicines. At times the company achieved growth rates of more than 30 percent.
However, not only the decline in Corona-related sales is responsible for the currently weak development. Even without the Covid contribution, sales shrank in the upper single-digit percentage range. This is mainly due to the reduction in inventories at pharmaceutical customers, which is taking longer than expected.
Sartorius is reacting to downturns with job cuts
During the pandemic, customers had built up enormous inventories – also out of concern about supply bottlenecks. Kreuzburg anticipates that the majority of customers will reach their inventory target in the third quarter and orders will then pick up again. The manager does not see any economic influences in this business.
Sartorius has already responded to the downturn by cutting jobs. The number of employees was reduced by 900 to 15,000 employees. There were no layoffs for operational reasons, the downsizing took place via volunteer programs and severance payments. According to Kreuzburg, this cost Sartorius a low double-digit million amount.
The Sartorius boss expects orders to pick up again in the second half of the year.
(Photo: imago images/Hubert Jelinek)
In June, the Dax group from Göttingen had reduced its sales and profit targets for the current year due to the weak development. The prognosis has now been confirmed. The company expects a drop in sales of around ten to 15 percent for the year as a whole. The operating margin (Ebitda margin) should reach around 30 percent and will thus be below the previous year’s value of 33.8 percent. In the first half of the year it was 29.8 percent.
A few days ago, Sartorius completed the acquisition of the French biotech company Polyplus for 2.4 billion euros, which was announced at the end of March. According to Kreuzburg, refinancing through a bond is in preparation.
Polyplus will contribute around one percent to Sartorius’ sales growth this year. The debt ratio of the Dax group increases as a result of the acquisition from 2.1 to four times the operating profit. Analysts had rated the acquisition as expensive.
Polyplus produces components used in the manufacture of viral vectors. These are used in cell and gene therapies, an area that is considered to be a promising growth market.
More: Investors punish Sartorius after profit warning.