MILAN--(BUSINESS WIRE)--Consolidated results for 2010:
- Consolidated revenues at €745.8 million, an increase of 4.9%*° over 2009 (+8.2% at actual foreign-exchange rates);
- EBITDA at €120.2 million (16.1% of revenues, compared to 14.4% in 2009) and EBIT at €71.5 million (9.6% of revenues, compared to 7.5% in 2009);
- Net profit increasing by 68.5% over 2009 to €39.1 million (5.2% of revenues);
- Net financial debt of €128.8 million as of December 31, 2010, with significant improvement when compared to €181.6 million as of December 31, 2009 and €156.4 million as of September 30, 2010.
Forecasts are confirmed for the 2011 fiscal year: consolidated revenues rising by 3-5%*° over 2010, EBITDA improving to approximately 17% of revenues, net profit to total around €49-53 million, increasing by 25-35%* in comparison to 2010, and free cash flow§ to be substantially equivalent to net profit.
2011-2015 Strategic Plan has been approved: consolidated revenues increasing by 3-5%*° organic CAGR, EBITDA margin increasing by approximately 100 basis points per annum, net profit in the range of €80-100 million by 2015 and cumulated free cash flow§ totaling over €300 million for the next five years. The outlines for the new Strategic Plan will be presented to the financial community on Monday, March 21, 2011.
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At a meeting held today and chaired by Rosario Bifulco, Sorin S.p.A. Board of Directors approved the Draft of the 2010 Financial Statements and the 2011-2015 Strategic Plan.
"The final data for 2010 are fully in line with the preliminary figures previously published, and confirm the excellent financial and business results obtained by Sorin Group (MIL:SRN)during the past year," stated André-Michel Ballester, Sorin Group's Chief Executive Officer, "The 2011-2015 Plan is focused on a long-term growth acceleration strategy, highlighting the main drivers for development, such as the constant commitment to innovation and the penetration in new geographies and product segments. This growth strategy will be pursued while maintaining our strong focus on continuous improvement of the Group's earnings profile and on its cash-generating capacity."
CONSOLIDATED RESULTS FOR 2010
In 2010, Sorin Group reported revenues of €745.8 million, an increase of 4.9%*° with respect to the prior year (+8.2% at actual foreign-exchange rates).
- The Cardiopulmonary Business Unit reported 2010 revenues of €337.8 million, an increase of 2.5%*° compared to 2009 (+6.7% at actual foreign-exchange rates). The positive results are mainly attributable to (i) the strong performance of heart-lung machines in the main European markets and in the United States, driven by the launch of the new products, and (ii) the growth in the oxygenator business, which benefited from the acquisition of Gish Biomedical in 2010. While remaining essentially stable in 2010, the autotransfusion systems segment will benefit from the availability of the new generation XtraTM system starting in 2011.
|FY 10 Revenues||FY 09 Revenues||% change *|
|Autotransfusion machines and devices||58.9||56.4||0.2%|
- The Cardiac Rhythm Management Business Unit reported revenues of €284.6 million in 2010, an increase of 8.4%* over 2009 (+11.3% at actual foreign-exchange rates). The results were driven by strong performance across all of the key markets. The high voltage segment benefited from the increasing penetration in the US market where the new-generation ParadymTM devices were launched during the year. In the low voltage market segment, characterized by lower levels of growth, Sorin maintained its position in the European countries in which it has traditionally been strong.
|FY 10 Revenues||FY 09 Revenues||% change *|
|High Voltage (defibrillators and CRT-D)||95.1||76.4||21.6%|
|Low Voltage (pacemakers)||179.0||170.2||2.3%|
|Total Cardiac Rhythm Management||284.6||255.6||8.4%|
- The Heart Valves Business Unit realized revenues of €120.5 million, an increase of 3.4%* compared to 2009 (+6.8% at actual foreign-exchange rates). The business unit's results were driven by the tissue heart valves segment whose positive performance is mainly attributable to MitroflowTM market shares gains in the United States. The mechanical heart valves segment is declining in line with expectations, despite positive performance in emerging markets.
|FY 10 Revenues||FY 09 Revenues||% change *|
|Mechanical Heart Valves||58.3||59.5||-5.0%|
|Tissue Heart Valves||55.6||47.2||14.0%|
|Total Heart Valves||120.5||112.8||3.4%|
Gross profit rose to €439.3 million, 58.9% of revenues, compared to €384.3 million, 55.8% of revenues in 2009. The significant improvement is mainly the result of the reduction of manufacturing costs, and, to a lesser extent, a more favorable geographic and product mix and a positive foreign-exchange effect.
Selling, general and administrative (SG&A) expenses amounted to €293.9 million, 39.4% of revenues, compared to €266.7 million, 38.7% of revenues in 2009. The growth in terms of the percentage of sales is entirely attributable to the impact of the adoption of hedge accounting in 2010. Excluding such impact, SG&A expenses decreased to 38.0% of revenues compared to 38.7% in 2009.
Research and development (R&D) expenses rose by 13.4% to €66.9 million (9.0% of revenues) versus €59.0 million (8.6% of revenues) in 2009.
EBITDA in 2010 rose by 21.0% to €120.2 million, 16.1% of revenues, compared to €99.4 million, 14.4% of revenues, in 2009.
EBIT in 2010 climbed by 38.8% to €71.5 million (9.6% of revenues), compared to €51.5 million (7.5% of revenues) in 2009. The special items for the year had a negative impact of €6.9 million, as detailed in the exhibit. Excluding special items, EBIT grew by 33.8% to €78.4 million, compared to €58.6 million in 2009.
Net profit rose by a significant 68.5% to €39.1 million (5.2% of revenues), compared to €23.2 million in 2009 (3.4% of revenues).
Net financial debt as of December 31, 2010 amounted to €128.8 million, an improvement when compared to €181.6 million as of December 31, 2009 and €156.4 million as of September 30, 2010. Net cash flow of €52.8 million during 2010 was mainly generated by an improvement in profitability and a reduction of working capital. The net impact of special items was marginal, as detailed in the exhibit.
Guidance for 2011
For fiscal year 2011, the Company projects consolidated revenue growth of 3-5%*° compared to 2010, an EBITDA margin improving to approximately 17% of revenues and a net profit equal to approximately €49-53 million, an increase of 25-35%* compared to 2010. The Company also projects free cash-flow generation§ approximately equal to its net profit.
The previously published guidance for the current quarter is confirmed: revenue growth of 3-5%*° compared with the first quarter of 2010 and net profit of approximately €8-10 million.
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The Board of Directors also approved the Financial Statements of the parent company, Sorin S.p.A., which reported net profit of €10.0 million (€2.1 million in 2009), with a proposal to allocate the profit to the legal reserve (€0.5 million) and retained earnings (€9.5 million).
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Call of shareholders' meeting
The Draft of the 2010 Financial Statements approved by the Sorin S.p.A. Board of Directors will be submitted to the next shareholders’ meeting of the Company convened for April 27, 2011 (first call) and, if necessary, for April 28, 2011 (second call). During an extraordinary session of the meeting, the shareholders will also deliberate on the proposal to change the Article 8 of the corporate by-laws (Convocation, right to attend and representation at shareholders' meetings) as a result of the introduction of EC Directive n. 2007/36/EC.
The directors' reports containing the proposals to be addressed at the shareholders' meeting will be made available at the Company's registered office and on the Company's Internet site, pursuant to current regulations.
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2011-2015 STRATEGIC PLAN
The Board of Directors of Sorin Group has approved the 2011-2015 Strategic Plan, the outline of which will be presented to the financial community during a meeting scheduled for Monday, March 21, 2011, at 10.00 am CET at the Company's headquarters in Milan (with teleconference access also available).
This new Plan reaffirms Sorin’s attention to rigorous financial discipline in support of the continuous improvement of the Group’s profitability and cash flow generation. In addition, the new Plan focuses on key strategies for accelerating the Group’s medium-long term growth.
Sorin Group will continue to grow its investment in innovation while prioritizing R&D programs across the three business units to ensure optimal capital allocation. The Group will also focus on improved time-to-market for its new products, optimizing research and development timeline and more effective completion of the clinical and regulatory phases of new product introductions. In addition, the Group will sustain its long-term investment in innovation through selected technology acquisitions.
The Company intends to strengthen its presence in developed countries and in particular in the United States and to enter new emerging markets. The Company believes that countries such as China, Brazil and Russia represent important growth opportunities in the cardiovascular space.
Finally, the Company will evaluate acquisitions aimed at increasing the Group's critical mass in markets in which it is already present or in adjacent business segments.
Financial targets for 2011-2015
Sorin Group expects consolidated revenues to grow 3-5%* organic CAGR during the 2010-2015 period despite challenging market conditions.
- The Cardiopulmonary Business Unit expects revenues to grow 1-2%* CAGR, thanks to geographic expansion in emerging markets, launch of new products (such as the Linox family of oxygenators and the new Xtra autotransfusion system) and development of potential opportunities in adjacent segments.
- The Cardiac Rhythm Management Business Unit forecasts revenue growth of 5-7%* CAGR during the period. The growth is expected to be driven by greater penetration in the high voltage segment, with a particular focus in the hemodynamic management of heart failure, and by continuous expansion of its position in the low voltage segment. The growth will also be driven by broadening of the product portfolio and by new innovative technologies, such as the SonR system for optimization of CRT patients.
- The Heart Valves Business Unit forecasts revenue growth of 8-10%* CAGR. This increase is expected to be driven by the launch of the new sutureless PercevalTM valve, ongoing penetration in the US market for tissue heart valves and further expansion in Europe. In the period the business unit will also extend its sutureless product range and will introduce a new generation of tissue valves in Europe and in the US.
EBITDA is expected to increase by approximately 100 basis points per annum during the 2010-2015 period, mainly due to gross margin improvement coming from manufacturing cost reduction, a more favorable geographic and product mix and the launch of premium-price products.
Net profit is forecast to be in the range of €80-100 million by 2015. For the 2011-2015 period, the Company expects to generate cumulated free cash flow§ totaling over €300 million.
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The corporate officer responsible for 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 documented results and the accounting books and records.
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In addition to the conventional indicators recommended by the IFRS, this press release provides alternative performance indicators. These indicators should not be considered as replacements for the conventional indicators recommended by the IFRS, but rather as additional source of information, representative of the income statement, balance sheet and financial position parameters used internally in the decision-making process. An explanation of the meaning and structure of these alternative performance indicators is provided in the last financial statements.
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This press release contains forward-looking statements. These statements are based on the Group’s current expectations and projections about future events and, by their nature, are subject to inherent risks and uncertainties. They relate to events and depend on circumstances that may or may not occur or exist in the future, and, as such, undue reliance should not be placed on them. Actual results may differ materially from those expressed in such statements as a result of a variety of factors, including: continued volatility and further deterioration of capital and financial markets, changes in commodity prices, changes in general economic conditions, economic growth and other changes in business conditions, changes in government regulation (both in Italy and abroad), and many other factors, most of which are outside of the Group’s control.
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About Sorin Group
Sorin Group (www.sorin.com) is a global company and a leader in the treatment of cardiovascular diseases. The company develops, manufactures and markets medical technologies and innovative therapies for cardiac surgery and for the treatment of cardiac rhythm disorders.
With 3,700 employees worldwide, the Group focuses on three major therapeutic areas: cardiopulmonary bypass (extra-corporeal circulation and autotransfusion systems), cardiac rhythm management (CRM) and heart valves. Each year, over one million patients are treated with the devices of Sorin Group in more than 80 countries.
For further information, visit: www.sorin.com
* At comparable foreign-exchange rates
° At constant perimeter of consolidation
§ Free cash flow: net profit + depreciation, amortization and writedowns ± ∆ working capital - investments