Sorin Group Announces H1 2008 Results: Net Earnings at 14.4 Million Euros and Net Debt Down to 270.3 Million Euros as of June 30, 2008

MILAN, Italy--(BUSINESS WIRE)--Sorin Group (MIL:SRN)

• In H1 08 revenues were 379.5 million euros, up 0.3%(*)(**) as compared with the same period in 2007;
• EBIT during H1 08 was 29.9 million euros versus -22.1 million euros in the same period last year. Excluding non-recurring items, EBIT was 21.0 million euros (5.5% of revenues) versus 15.4 million euros in H1 07 (3.8% of revenues);
• EBITDA margin was 11.4%, versus 10.5% in H1 07; both EBIT and EBITDA margins improved despite FX material adverse impact;
• Net earnings in H1 08 were 14.4 million euros in comparison with -36.3 million euros in H1 07;
• Net Debt as of June 30, 08 was 270.3 million euros versus 309.9 million euros as of June 30, 07.
• 2008 full-year guidance confirmed

The Board of Directors of Sorin S.p.A. in a meeting today chaired by Umberto Rosa, approved the Financial Statements for the 1^st half of 2008, which closed on June 30, confirming the preliminary figures for Q2 08 which had already been announced on July 25, 2008.

“The significant improvement in Net Financial Position and Profitability is the result of our aggressive programs to reduce Working Capital and costs. While we continuously strengthen the financial position of our Company, we maintain a constant commitment to innovation in our core cardiovascular business”, said André-Michel Ballester, Chief Executive Officer.

During the first half 2008, Sorin Group posted Revenues of 379.5 million euros, up 0.3%(*)(**) over the same period in 2007. Foreign exchange negatively impacted revenues in the first half 2008 by 15.2 million euros.

• The Cardiopulmonary Business Unit reported revenues at 147.1 million euros, down 0.9%(*)(**) from H1 07. Sales of Heart-Lung Machines were 24 million euros in H1 08, down 9%(**) against H1 07. In the Oxygenator segment revenues were 94 million euros, down 1%(*)(**) as compared with H1 07. The Company has maintained its global market share in these segments. The Auto-transfusion business was up 5%(*)(**) to 29 million euros thanks to increased adoption of the technology by surgeons around the world. The company expects that the combined launch of the S5^TM Heart-Lung Machine in Japan and of the Kids D101^TM Infant Oxygenator worldwide will maintain a similar sales momentum for the rest of the year.

• The Cardiac Rhythm Management Business Unit (implantable devices that manage cardiac rhythm disorders) reported revenues of 113.8 million euros during H1 08, flat(**) from the same period last year. Sales rose 4%(**) in the High Voltage segment (Ovatio^TM defibrillators and CRT-D) to 33 million euros while the Low Voltage segment (Symphony^TM and Reply^TM pacemakers) was down 3%(**) to 76 million euros.

During H1 08 sales were impacted by management decisions to discontinue USD based sales in unprofitable countries and to restructure its sales force in the United States. They were also impacted by a temporary change in the reimbursement for the Symphony^TM pacemakers in France.

The company expects that the launch of Ovatio^TM CRT-D in the US and the marketing of the new generation CRT-D device in Europe and of Reply^TM in Japan and in the US as well as the extension of a premium reimbursement for its pacemakers in France will positively impact sales growth in H2 08.

• The Heart Valves Business Unit (including mechanical and tissue heart valves, as well as valve repair products) reported revenues of 53.6 million euros, up 7.0%(**). The Tissue Heart Valves segment revenues were up 38%(**) to 19 million euros, fuelled by a growing penetration of the Mitroflow^TM valve in the US. In the Mechanical Heart Valves segment revenues declined 5%(**), to 31 million euros reflecting a stable market share position globally and management decision to reduce inventory for specific distributors. The company expects growth in the heart valves business to accelerate further in the second half of 2008, exceeding previous expectations.
• The Vascular Therapy Business Unit (drug-eluting and bare-metal coronary stents, endovascular stents and catheters for angioplasty) posted revenues of 12.1 million euros in H1 08, down 25.9%(**) as compared with the same period in 2007. The Renal Care Business Unit (biomedical devices used to treat patients with kidney diseases) had revenues of 52.0 million euros during H1 08, up 4.1%(**)(*) as compared to H1 07. Both businesses performed according to expectations.

Gross Profit was 195.8 million euros in the first half, or 51.6% of revenues (compared to 205.4 million euros, or 51.3% of revenues, for the same period in 2007). Improvement in manufacturing efficiency was offset by unfavourable FX impact and product mix. The company expects that the combined impact of its cost reduction initiatives program and a better product mix will improve gross margin in H2 08 as compared with H2 07.

As a result of the ongoing cost reduction programs, SG&A expenses during the first half 2008 declined to 146.0 million euros (38.5% of revenues) from 162.5 million euros for the same period in 2007 (40.6% of revenues).

Research and Development expenses were 28.7 million euros, or 7.6% of revenues, up from 6.9% in H1 07, highlighting the Company’s efforts to maintain a strong commitment to innovation in its three core cardiovascular businesses.

EBIT during H1 08 was 29.9 million euros, or 7.9% of revenues, compared to -22.1 million euros in H1 07. EBIT was positively impacted in H1 08 by a non-recurring profit of 8.9 million euros on the disposal of the peripheral stent business.

Excluding non-recurring items, EBIT in H1 08 was 21.0 million euros versus 15.4 million Euro in H1 07. EBIT margin significantly improved to 5.5% in H1 08 from 3.8% in H1 07.

EBITDA amounted to 43.3 million euros (11.4% of revenues) in H1 08, compared to 41.9 million euros (10.5% of revenues) during the same period in 2007.

The profitability improvement was generated despite the material adverse impact of FX of approximately 4 million euros in H1 08.

Net earnings in the first half 2008 were 14.4 million euros in comparison with -36.3 million euros in H1 07. Excluding non-recurring items, net earnings were 5.5 million euros in H1 08 in comparison with net earnings of 1.2 million euros in H1 07.

The Group’s Net Debt as of June 30, 2008 was 270.3 million euros compared to 309.9 million euros as of June 30, 2007 and 318.2 million euros as of March 31, 2008. Net Debt was positively impacted by non-recurring items for a net total of 25.0 million euros. In particular, the true sale of European receivables within a 5 year revolving and without recourse factoring program and the divestiture of the peripheral stent business generated 32.9 million euros and 7.0 million euros, respectively. Conversely, the net financial position was also negatively impacted by various restructuring related expenditures and others for 14.9 million euros.

The Company confirms the previously communicated guidance for full-year 2008.

During Q3 08 revenues are expected to be substantially constant(*)(**) in comparison with same period last year. EBITDA and EBIT margins are expected to be in the range of 8.5-9.0% and 3.0-3.5% of revenues, respectively, a significant improvement over same period last year (7.4% and 0.8% of revenues, respectively) despite an anticipated FX adverse impact. Net Debt at the end of Q3 08 is expected to be below 290 million euros, significantly lower than at the end of Q3 07 (328.9 million euros).

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(*) Net of sales to subcontractors

(**) At comparable foreign exchange rates

The manager responsible for preparing the company's financial reports, Demetrio Mauro, declares, pursuant to paragraph 2 of Article 154 bis of the Consolidated Law on Finance, that the accounting information contained in this press release corresponds to the document results, books and accounting records.

About Sorin Group

The Sorin Group (www.sorin.com), a world leader in the development of medical technologies for cardiac surgery, offers innovative therapies for cardiac rhythm dysfunctions, interventional cardiology, and the treatment of chronic kidney diseases. At the Sorin Group, more than 4,000 employees work to serve over 5,000 public and private treatment centers. Every year, over 1 million patients are treated with the devices of Sorin Group in more than 80 countries.