Sartorius nine-month figures: Normalization of demand continues after end of pandemic
 

• Sales revenue in constant currencies down 16.4 percent, excluding Covid-19-related business down slightly above 10 percent; underlying EBITDA margin at 28.8 percent
• Post-pandemic inventory reductions by customers taking longer than expected
• Financial guidance adapted on October 12
• Uncertainties remain high due to the global political and economic situation

Despite initial signs of recovery at the end of the third quarter, soft customer demand that lasted longer than expected shaped the business development of the life science group Sartorius in the first nine months of 2023. After pandemic-related extraordinary business and inventory buildup by customers had triggered strong additional growth momentum in previous years, the company recorded declines in sales revenue and profitability. For the full year, Sartorius expects a decline in sales revenue by approximately 17 percent, with an underlying EBITDA margin of slightly above 28 percent.

“2023 will be a year of normalization for Sartorius as well as for the market as a whole. The reduction of inventories by our customers after the end of the pandemic is taking longer than expected and is thus delaying the recovery. In our Bioprocess Solutions division, we have seen a slight upturn in the order situation since the end of the third quarter, but this has been more hesitant than expected. In addition, development of the lab business has recently fallen short of our expectations, partly due to increased reluctance on the part of customers, particularly from China and the USA, to purchase laboratory instruments. We expect orders to continue to increase slightly in the fourth quarter, especially in the Bioprocess Solutions division, and anticipate profitable growth in 2024 and beyond,” said Sartorius CEO Joachim Kreuzburg.

Business development of the Group¹
Between January and September, the Sartorius Group’s sales revenue fell 16.4 percent in constant currencies (reported: - 18.2 percent) to 2,546 million euros due to the ongoing normalization of demand in all regions and compared with a higher prior-year baseline characterized by Covid-19-related positive extraordinary effects. This includes a growth contribution from acquisitions² of slightly more than 1 percentage point. Excluding the pandemic-related business, the decline in constant currencies stood at slightly above 10 percent. Order intake decreased by 27.9 percent in constant currencies (reported: - 29.5 percent) to 2,201 million euros.

Underlying EBITDA decreased by 30.3 percent to 733 million euros in the first nine months, mainly due to volume and product mix effects. The resulting margin was 28.8 percent, compared with 33.8 percent in the prior-year period. Price effects on the procurement and customer sides largely offset each other.

Relevant net profit totaled 274 million euros, compared with 501 million euros in the prior-year period. Underlying earnings per ordinary share stood at 4.00 euros (prior-year period: 7.32 euros) and at 4.01 euros (prior-year period: 7.33 euros) per preferred share. Sartorius had 14,827 employees worldwide as of September 30, 2023 (December 31, 2022: 15,942).

Key financial indicators
After closing the acquisition of Polyplus, the equity ratio decreased as expected to 27.6 percent as of September 30, 2023 (December 31, 2022: 38.1 percent), and the ratio of net debt to underlying EBITDA was 4.5 (December 31, 2022: 1.7). Cash flow from investing activities, excluding acquisitions, stood at - 451 million euros, compared with - 362 million euros in the prior-year period. The ratio of capital expenditures (capex) to sales revenue reached 17.0 percent, compared with 11.3 percent in the first nine months of 2022.

Business development of the Bioprocess Solutions division
In the Bioprocess Solutions division, which offers a wide array of innovative technologies for the manufacture of biopharmaceuticals and vaccines as well as cell and gene therapeutics, sales revenue after nine months stood at 1,993 million euros, down 17.7 percent in constant currencies (reported: - 19.3 percent) from the high level of the prior-year period. This includes a growth contribution from acquisitions of around 2 percentage points. Excluding the Covid-19-related business, the decline stood slightly above 10 percent in constant currencies. Main drivers of the decline were the longer than expected ongoing inventory reductions after the end of the pandemic, relatively low production levels at some customers, the largely discontinued business in Russia, and an overall muted investment activity on the part of customers, primarily in China and the USA.

The temporarily weaker market environment was also reflected in order intake, which decreased by 28.9 percent in constant currencies (reported: -30.4 percent) to 1,708 million euros in the first nine months. In line with progress made by customers in reducing their inventories, there were signs of a slight recovery in order intake at the end of the third quarter.

The division’s underlying EBITDA decreased by 32.9 percent to 592 million euros as a result of the volume development and product mix effects, resulting in a margin of 29.7 percent (prior-year period: 35.7 percent).

Business development of the Lab Products & Services division
The Lab Products & Services division, which specializes in life science research and pharmaceutical laboratories, recorded sales revenue of 553 million euros, a decline of 11.4 percent in constant currencies compared to the high level of the prior-year period (reported: -13.9 percent). Excluding the Covid-19-related business, sales revenue would have declined by around 9 percent in constant currencies. The division, which generates a significant portion of its sales revenue with high-quality laboratory and bioanalytical instruments, was significantly impacted by the cautious spending behavior on the part of customers in the pharma industry, particularly in China and the USA, which has been increasing since the third quarter.

The dampening impact of these factors was even more pronounced on order intake, which stood at 493 million euros after nine months (in constant currencies: -24.2 percent; reported: -26.3 percent).

The division’s underlying EBITDA declined by 16.8 percent to 141 million euros. At 25.6 percent, the corresponding margin stood slightly below the level of the prior-year period (26.5 percent).

Outlook for fiscal year 2023 adapted on October 12
Based on its preliminary results after nine months, company management lowered its guidance for the current fiscal year on October 12, and expects full-year sales revenue to decline by around 17 percent; excluding the Covid-19-related business, sales revenue would decline by around 12 percent. Acquisitions are expected to contribute around 2 percentage points to the sales revenue development.

Due to the lower volume expectation and product mix effects, Sartorius expects an underlying EBITDA margin of slightly above 28 percent.

The capex ratio is expected to stand at slightly above 17 percent in 2023, with a ratio of net debt to underlying EBITDA of slightly above 5.

Against the backdrop of a demand recovery, that has been visible since the middle of the year, but which is proceeding only slowly, Sartorius now expects for its Bioprocess Solutions division a sales revenue decline of around 18 percent; excluding Covid-19-related business a decline of around 13 percent. Acquisitions are expected to contribute around 2 percentage points to sales revenue development. The underlying EBITDA margin is expected to be slightly above 29 percent.

For its Lab Products & Services division Sartorius expects a sales revenue decline of around 13 percent, excluding Covid-19-related business a decline of around 10 percent. The underlying EBITDA margin should be slightly above 25 percent.

The company confirms its fundamentally positive medium- and long-term market outlook and continues to see itself in a strong competitive position. For 2024, management expects profitable growth and will issue quantitative guidance with the release of the 2023 full-year figures next January. Its mid-term ambition is currently under review and an update will also be provided in January 2024.

All forecasts are based on constant currencies, as in the past years. Management points out that the industry has become increasingly dynamic and volatile in recent years. In addition, uncertainties due to the shifting geopolitical situation, such as various countries’ nascent decoupling tendencies, are playing an increasing role. This results in increased uncertainty when forecasting business figures.

1 Sartorius publishes alternative performance measures that are not defined by international accounting standards. These are determined with the aim of improving the comparability of business performance over time and within the industry.

• Order intake: all customer orders contractually concluded and booked during the respective reporting period
• Underlying EBITDA: earnings before interest, taxes, depreciation and amortization and adjusted for extraordinary items
• Relevant net profit: profit for the period after non-controlling interest, adjusted for extraordinary items and amortization, as well as based on the normalized financial result and the normalized tax rate
• Ratio of net debt to underlying EBITDA: Quotient of net debt and underlying EBITDA over the past 12 months, including the pro forma amount contributed by acquisitions for this period

2 Acquisition of the Novasep chromatography division, Albumedix, and Polyplus

This press release contains forward-looking statements about the future development of the Sartorius Group. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such statements. Sartorius assumes no liability for updating such statements in light of new information or future events. This is a translation of the original German-language press release. Sartorius shall not assume any liability for the correctness of this translation. The original German press release is the legally binding version.


Conference call
The Executive Board Chairman and CEO of Sartorius AG, Joachim Kreuzburg, and Executive Board member and CFO, Rainer Lehmann, will discuss the company’s business results with analysts and investors in a conference call on October 19, 2023, at 12.30 p.m. CEST. Please click on the link to register: https://media.choruscall.eu/mediaframe/webcast.html?webcastid=zhpcEBhZ


Further Information and media content
https://www.sartorius.com/newsroom
  Key Performance Indicators for Nine Months 2023

	Sartorius Group				Bioprocess Solutions				Lab Products & Services
in millions of € unless otherwise specified	9-mo. 2023	9-mo. 2022¹	Δ in %	Δ in % cc²	9-mo. 2023	9-mo. 2022¹	Δ in %	Δ in % cc²	9-mo. 2023	9-mo. 2022¹	Δ in %	Δ in % cc²
Order Intake and Sales Revenue
Order intake	2,200.9	3,121.1	-29.5	-27.9	1,707.5	2,451.8	-30.4	-28.9	493.4	669.4	-26.3	-24.2
Sales revenue	2,545.9	3,112.9	-18.2	-16.4	1,992.9	2,470.9	-19.3	-17.7	553.0	642.1	-13.9	-11.4
EMEA3	972.7	1,157.9	-16.0	-15.4	766.4	943.3	-18.8	-18.3	206.3	214.7	-3.9	-2.6
Americas3	973.4	1,130.1	-13.9	-12.3	792.6	896.8	-11.6	-10.0	180.9	233.3	-22.5	-21.0
Asia | Pacific3	599.8	824.9	-27.3	-23.4	433.9	630.8	-31.2	-27.6	165.8	194.1	-14.5	-9.6
Earnings
EBITDA4	733.4	1,051.5	-30.3		591.9	881.5	-32.9		141.5	170.0	-16.8
EBITDA-Margin4 in %	28.8	33.8			29.7	35.7			25.6	26.5
Relevant net profit5	273.9	501.2	-45.3
Net result6	196.8	522.9	-62.4
Financial Data per Share
Earnings per ord. share5 in €	4.00	7.32	-45.4
Earnings per pref. share5 in €	4.01	7.33	-45.3

1 The previous year's figures have been slightly restated due to finalization of purchase price allocations for the acquisition of Albumedix Ltd
2 cc = constant currency
3 According  to customer´s location
4 Relevant / underlying EBITDA: earnings before interest, taxes, depreciation, and amortization and adjusted for extraordinary items
5 After non-controlling interest, adjusted for extraordinary items and amortization, as well as based on the normalized financial result and the normalized tax rate
6 After non-controlling interest

A profile of Sartorius
Sartorius is a leading international partner of life sciences research and the biopharmaceutical industry. With innovative laboratory instruments and consumables, the Group’s Lab Products & Services division focuses on laboratories performing research and quality control at pharmaceutical and biopharmaceutical companies as well as academic research institutes. The Bioprocess Solutions division, with its broad product portfolio focusing on single-use solutions, helps customers manufacture biotech medications and vaccines safely, rapidly and economically. The company, based in Göttingen, Germany, has a strong global reach with around 60 production and sales sites worldwide. Sartorius delivers significant organic growth and regularly expands its portfolio through the acquisition of complementary technologies. In 2022, the company generated sales revenue of around 4.2 billion euros. Currently, around 15,000 employees are working for customers around the globe.

Contact
Petra Kirchhoff
Head of Corporate Communications & Investor Relations
+49 (0)551.308.1686
[email protected]

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