11 May 2010
Eurofins' first quarter of 2010 was, as usual, a relatively quiet one. Other than the impact of exceptionally cold weather, the results in the business during the quarter show nothing unexpected. Eurofins' revenues continue to grow in spite of the negative impact of this extreme weather and of discontinued activities. It is still too early in the year to see trends in specific markets but the underlying seasonality appears to be consistent with previous years. The Group remains on track in its finalisation of a five year modernisation and improvement plan, with the completion of three out of the remaining five major planned laboratory projects during the quarter. The first results of this modernisation plan are now visible.
The first quarter is normally seasonally quiet at Eurofins and 2010 was not a particular exception. Winter conditions always make it difficult to carry out environmental testing on soil and water and this year's winter was the coldest for decades and lasted for longer than usual. In several northern European countries, 2010 was reported as the coldest winter in 50 years with snow still covering the ground and preventing sampling in March. The environmental business was duly affected as the number of samples for all matrices dropped significantly, even compared to 2009. Sample numbers have now recovered but this significantly affected Group organic growth, which was flat in Q1 2010, and profitability. Some pharma services laboratories, as in 2009, are seeing a delay in spending from sponsors although in general the market appears to be stable. In the food business results were solid, but as most activity is carried out in the second half of the year it is too early to make judgements on longer term trends.Revenues for the first quarter were ¤149.1m, up 1% from ¤148.2m in Q1 2009, even after taking into account the impact of discontinued activities and of the severe weather. Clean EBITDAi increased to ¤13.3m in Q1 2010 from ¤12.6m in Q1 2009 (one-off/reorganisation costs of ¤2.8m Q1 2010, ¤1.9m in Q1 2009). After these one-off/reorganisation charges EBITDA in Q1 2010 was ¤10.5m, close to Q1 2009 reported numbers of ¤10.7m. Clean EBITASii also increased to ¤3.6m from ¤3.5m in Q1 2009. After one-off/reorganisation charges EBITAS was slightly down at ¤0.8m (¤1.6m Q1 2009). Net working capital at 31 March 2010 was 4.8% of revenues, the same as at 31 December 2009 (4.8%) and a significant improvement on 31 March 2009 (6.7%). Net cash flow provided by operating activities was up 41%, reaching ¤9.2m in Q1 2010 compared to ¤6.5m Q1 2009.
As of the beginning of 2010, and as reported in the 2009 Annual Results, Eurofins has now brought almost 100% of its laboratories up to Group standards. This means that most of the laboratories have now implemented best-practice processes, state-of-the-art IT systems and have suitable management in place. Those that have not are mainly start up laboratories which are in various stages of the development process. To aid longer-term transparency and consistency, quarterly reporting will from now on focus on the Group results as a whole. The optic of two perimeters, designed to assist investors during a period of heavy investment and changes at the Group, has now become less meaningful, especially on a quarterly basis (Under Development revenues were only around ¤5m in Q1 2010).
One-off/reorganisation costs for the quarter, consisting mainly of employee compensation and rent expenses for discontinued laboratories, were ¤2.8m (¤1.9m Q1 2009), in line with the Group's stated plans to complete the consolidation of small, old or unprofitable laboratories into its large newly-modernised and expanded state-of-the-art laboratories.
Eurofins' cash generation continues to show positive trends and developed well in Q1 2010, in spite of the impact of the extreme winter on profitability. Net cash provided by operating activities increased by 41% to ¤9.2m (¤6.5m Q1 2009) as a result of better profit before tax, higher depreciation and strong control over Net Working Capital. As a result of the near completion of the Group's five-year investment programme capital expenditure has started to move towards normal levels (¤8.1m, 5.5% of revenues in Q1 2010, ¤10.9m, 7.3% of revenues in Q1 2009) and interest payments have also reduced as borrowing levels have decreased (¤2.3m Q1 2010, ¤3.2m Q1 2009). Therefore Free Cash Flowiii for the first quarter 2010 was -¤0.9m, compared to -¤6.3m in Q1 2009. In fact excluding cash payments related to one-off/reorganisation costs that were paid in Q1 2010 of ¤6.1m (representing both utilisation of the provision, i.e. 2009 costs, and Q1 2010 one-off costs) the Free Cash Flow actually becomes positive at ¤5.2m. Cash out for one-off/reorganisation costs was ¤2.2m in Q1 2009, so clean Free Cash Flow for that period was -¤4.1m (i.e. an improvement of ¤9.3m in Q1 2010 compared to the same quarter last year). There was no acquisition activity in Q1 2010 and 'Acquisition payments' of ¤0.6m relate to previous acquisitions (¤5.9m Q1 2009, around half of which was deferred payments for previous acquisitions). The Balance Sheet therefore remains well structured. Net debt is ¤185.4m at 31 March 2010 (¤183.7m 31 December 2009) and the covenants have remained the same and well within limits: net debt / equity at 0.9x and net debt to clean EBITDA at 2.0x, with maximums of 1.5x and 3.5x respectively.
Due to the reasons given above, Eurofins has no further views on how the markets will progress during 2010 and so will not for the moment give indications on the expected level of growth or profitability for the year. However, progress on internal projects continues to go well and the Group is looking forward to building on a strong base for operational improvement during the rest of 2010.
Summary table of results
|(¤m)||Q1 2010||Q1 2009|
|Net profit attr. to equity holders||-3.0||-2.9|
|Net cash provided by operating activities||9.2||6.5|
i Clean EBITDA - Earnings Before Interest, Tax, Depreciation and Amortisation, before one-off/reorganisation costs
ii Clean EBITAS - Earnings Before Interest, Tax, Amortisation of intangible assets related to acquisitions and non-cash charge for Share options, before one-off/reorganisation costs
iii Free Cash Flow - net cash flow provided by operating activities less cash used in investing activities, excluding acquisition payments and including interest payments
Full disclosure can be found in the First Quarter Report 2010, including further management commentary, consolidated financial statements and accompanying summary notes.
The First Quarter Report 2010 can be found on the Eurofins website at the following location:
For further information please contact:
Phone: +32-2-769 7383
Notes for the editor:
Eurofins - a global leader in bio-analysis
Eurofins Scientific is a life sciences company operating internationally to provide a comprehensive range of analytical testing services to clients from a wide range of industries including the pharmaceutical, food and environmental sectors.
With 8,000 staff in more than 150 laboratories across 30 countries, Eurofins offers a portfolio of over 40,000 reliable analytical methods for evaluating the authenticity, origin, safety, identity, composition and purity of biological substances and products. The Group is committed to providing its customers with high quality services, accurate results in time and, if requested, expert advice by its highly qualified staff.
The Eurofins Group is the world leader in food testing and one of the global market leaders in pharmaceuticals and environmental testing. It intends to pursue its dynamic growth strategy and expand both its technology portfolio and its geographic reach. Through R&D and acquisitions, the Group draws on the latest developments in the field of biotechnology to offer its clients unique analytical solutions and the most comprehensive range of testing methods.
As one of the most innovative and quality oriented international players in its industry, Eurofins is ideally positioned to support its clients' increasingly stringent quality and safety standards and the demands of regulatory authorities around the world.
The shares of Eurofins Scientific are listed on the NYSE Euronext Paris (ISIN FR0000038259) and Frankfurt (WKN 910 251) Stock Exchanges (Reuters EUFI.LN, Bloomberg ERF FP).
This press release contains forward-looking statements and estimates that involve risks and uncertainties. The forward-looking statements and estimates contained herein represent the judgement of Eurofins Scientific as of the date of this release. These forward-looking statements are not guarantees for future performance, and the forward-looking events discussed in this release may not occur. Eurofins Scientific disclaims any intent or obligation to update any of these forward-looking statements and estimates. All statements and estimates are made based on the data available to the Company as of the date of publication, but no guarantee can be made as to their validity.Information réglementée
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|EUROFINS SCIENTIF||Euronext Paris||492.30 (c)||-2.78%||15 692|