Sorin S.p.A. (Sorin), a Italy-based medical devices company, has reported net revenues of EUR943.2 million for the full year of 2008, compared with the net revenues of EUR659.3 million in the previous year-end. It reported net loss of EUR37.1 million for the full year of 2008, compared with the net loss of EUR82.7 million in the previous year-end.
EBITDA EUR80.0 million (12.4% of revenues) and EBIT EUR45.1 million (7.0% of revenues).
Net Result before the impact of discontinued operations EUR0.5 million, versus a net result of EUR-51.2 million in 2007.
Net Debt as of December 31, 2008 down to EUR253.1 million, from EUR293.3 million as of December 31, 2007.
Strategic Plan for the period 2009-2013 approved by the board of directors. Highlights of the plan will be presented to the financial community in a meeting tomorrow, Friday March, 20th, in Milan.
In a meeting chaired by Rosario Bifulco, the board of directors of Sorin approved the final full-year 2008 results and the strategic plan for the period 2009-2013.
“We are very satisfied about our final results – said André-Michel Ballester, chief executive officer of the Sorin Group – which are in line or better than the preliminary data already disclosed. Despite the current macro-economic conditions and the unfavourable exchange rates, Sorin met its challenging financial and business goals in 2008. Throughout the year, we improved profitability profile and a decreased debt’s level”. “We are confident in our ability to pursue this progress in 2009 and beyond. The 2009-2013 Strategic Plan – Ballester added – confirms our commitment to maintain a strong financial discipline, to increase profitability through sales expansion and continued gross margin improvements and to progressively reduce our net debt”
2008 consolidated final results
The Gross Profit was 54.0% of revenues compared with 53.4% in 2007. The improvement is mainly attributable to the containment of industrial costs and a more favourable geographical mix, despite the negative FX impact. The improvement rose to 3 percentage points if compared with the business perimeter before the sale of the Vascular Therapy and Renal Care Business Unit.
SG&A decreased to EUR254.7 million, or 39.6% of revenues, down from EUR270.6 million, or 41.0% of revenues, in 2007. The implementation of a business unit model, the streamlining of the headquarters functions and the migration toward a shared service environment were the key drivers of this significant improvement. The company was also able to allocate more resources to the strengthening of its worldwide distribution network.
R&D expenses amounted to EUR52.4 million, or 8.1% of revenues, from EUR49.7 million, or 7.5% of revenues, in 2007, confirming Sorin Group’s strong commitment to innovation.
EBITDA in 2008 grew to EUR80.0 million (12.4% of revenues), compared to EUR74.0 million (11.2% of revenues) in 2007. The unfavourable foreign exchange impact was approximately EUR4 million.
EBIT in 2008 was EUR45.1 million (7.0% of revenues), compared to EUR-16.6 million in 2007. Special Items had a positive contribution of EUR5.1 million in 2008 (EUR-48.2 million in 2007). Excluding special items, EBIT in 2008 was EUR40.0 million, compared to EUR31.5 million in 2007, showing a significant improvement as a percentage of revenues, from 4.8% in 2007 to 6.2% in 2008**.
The company reported a consolidated Net Result of EUR0.5 million before the impact of discontinued operations, versus a net loss of EUR51.2 million in 2007. After discontinued operations, the company reported a consolidated net result of EUR-37.1 million compared to EUR-82.7 million in 2007.
Net Debt as of December 31, 2008 was EUR253.1 million, compared to EUR293.3 million as of December 31, 2007 and EUR286.2 million as of September 30, 2008. The cash generation of EUR40.2 million cash was achieved thanks to improved profitability and a reduction in working capital. Special items had a positive contribution of EUR20.2 million for the period .
Thanks to a significant reduction of the net debt (the Debt to EBITDA ratio decreased to 3.2X in 2008), the company was benefited from a reduction of spreads applied to the cost of its long term debt.
2009-2013 Strategic Plan
the board of directors also approved the 2009-2013 Strategic Plan, to be presented to the financial community in a meeting Friday March, 20th, in Milan, at the company’s Headquarters.
This Plan outlines a path towards achieving a sustainable growth in profitability and cash flow. In the 5-year period, the company will strengthen its market leadership in its core segments through continued technological innovation and costant strong financial discipline with a particular focus on Gross margin improvement.
In 2009 sales are expected to grow 2% – 3% versus 2008, with: Cardiopulmonary at 0% – 2%, Cardiac Rhythm Management at 5% – 7% and Heart Valves at 3% – 5%.
Sorin Group confirms a continuous improvement in profitability and cash flow generation driven by cost reduction initiatives (9 million Euro savings in 2008; 20 million Euro expected in 2009).
In terms of profitability ratios for 2009, Sorin Group expects EBIT margin to be at 7% – 8% of revenues and EBITDA margin to improve to 13-14% of revenues.
In 2009, the company expects to reach a positive Net Result and a Net financial debt further reduced to EUR220 million at the end of the year.
Sorin Group is expected to grow globally at a CAGR of 3-4%* in the 2009-2013 period.
The Cardiopulmonary Business Unit is expected in the period to post an average annual growth of revenues of 1-2%*, increasing its profitability and cash flow. The BU will leverage on its global leadership position and on the significant installed equipment base to support its share in disposable products, whilst entering adjacent market segments with internally developed and acquired technologies like Endoscopic Vessel Harvesting product line.
The Cardiac Rhythm Management Business Unit is expected to post an average annual growth in the period at 6-8%, supported by market,share gains in the High Voltage market and pursuing geographical market expansion, primarily in the US and in Japan, where Sorin aims at becoming the # 2 Low-Voltage player in 2009.
The Heart Valves Business Unit is expected in the period to grow annually at an average of 5% to 7%. This growth is mainly fuelled by the continuous market expansion coming from an aging population and a better access to care for a large number of patients currently not under treatment. In 2011, the company will introduce its innovative minimally invasive valve PercevalTM currently under clinical evaluation prior to CE Mark approval.
Gross margin is expected to grow above 60% of revenues by 2013, thanks to a comprehensive manufacturing cost reduction Program. This Program is focused on quality and design-to-cost, on the procurement process and higher efficiency and productivity.
EBITDA is planned to reach 19% to 20% of revenues by 2013.
The company announced its intention to further enhance its technologically advanced product portfolio through selected acquisitions of technologies over the period of the plan.
Net profit is expected to be EUR50 – 60 million by the end of the Plan. In 2013 Net Financial Debt is expected to be below EUR50 million (or below EUR100 million with selected acquisitions).