EUROFINS SCIENTIFIC : Eurofins Half Year 2009 results show continuing growth in most of its markets despite global economic downturn
31 August 2009
Eurofins has maintained revenue growth in the first half of the year. At the same time it has continued with its twofold strategy where on the one hand the Group is investing heavily in markets of extremely high potential and on the other hand it seeks to consolidate its laboratory network in all parts of the business. This is the strategy that best suits the markets in which Eurofins operates, where the underlying market drivers are still strong and should continue as such in the future.Revenues for the half year were €305.0m, up from €296.0m in H1 2008. Organic growth during the half year was 4% (constant currency) EBITDA reached €26.9m (H1 2008 €31.1m) and operating profit (EBITAS*) was €8m (H1 2008 €14.5m). Net cash flow provided by operating activities was up 8% to €11.8m in H1 2009 (€10.9m H1 2008) and up 343% from Q2 2008 (€5.3m Q2 2009, €1.2m Q2 2008)
Whilst the majority of its markets remain good and continue to grow, the Group's growth has slowed in some areas. Organic growth in the six months was still 4%, which although lower than the historic annual levels, is still higher than many of the economies in which the Group operates. Furthermore a part of the slow down in revenue growth is due to the Group's discontinuation of activities in areas which no longer exist or are no longer profitable (BSE testing and GMO inspection in some markets, SiRNA in Genomics and selected microbiology areas) or where Eurofins has closed or is selling laboratories, such as those arising from the competition authority's ruling in Norway. At the same time there has also been a continuation in the second quarter of some of the factors described in the first quarter report: namely the postponement of projects in Early Stage Pharma testing and a reduction in environmental testing that is directly linked to industrial activity (e.g. closure, "mothballing" or production decreases at factories and some construction activity). For the moment the Group is cautious in its expectations of how this will develop for the remainder of 2009 but considers that conditions should improve in the longer term. The markets still remain strong in the majority of Eurofins' activities, such as the later stage Pharma activities, and the food testing market in particular seems to be robust.
However, as can be seen, the effect of a slightly lower growth rate during the period has had a direct effect on the Group's profitability, mostly due to the level of operational leverage in the business at the moment. There is a mix of gearing up capacity for anticipated extra demand in some areas, especially during Q2, and the process and expense of reducing fixed costs and overheads in other areas where laboratory duplication still exists. The Group will now accelerate the consolidation in those areas where growth has temporarily slowed down and may consider exiting a few limited areas of low growth. In addition, whilst committed to projects that need investment in high growth areas, Eurofins has decided to reduce the level of capital expenditure for 2009 (to a level significantly below the amount spent in 2008). Eurofins remains cautious in its acquisitions for the remainder of the year.
The Up to Standard perimeter reported revenues of €244.1m and EBITAS* profits of €20.9m and the Under Development perimeter's revenues were €60.9m and EBITAS* was -€12.9m. In both perimeters the absence of faster revenue growth and the need to consolidate and cut costs affected the results.
Eurofins' management still believe though that a measured response will be for the longer term benefit of the Group, its shareholders, employees and customers, and for that reason has decided that it is important to continue to invest, particularly in areas of fast growth such as Asia. The Group has therefore decided to proceed with the development of three new laboratories in China and one in Japan. The USA is another region where a reinvigorated market should provide excellent opportunities and Eurofins continues to invest significantly in green-field start-up activities there.
In summary, the first half of the year was one in which Eurofins continued to grow, albeit at a lower rate than in the immediate past, due to a combination of discontinued services and softer markets in certain parts of its operations (mostly some specific Environment and Pharma laboratories). This has had a direct impact on profitability as the Group is not yet structured in a way it sees as optimal and because many investments have yet to reach full operational status. However, Eurofins' management still see strong markets in all three areas of operations and think that there is no change in the longer term orientation of these markets. Furthermore there are even opportunities for exceptional growth in the shorter term in regions such as Asia and the USA. Therefore the strategy of continuing improvement throughout the Group, focus in a few areas of start-ups and turnarounds, and investment for future growth and profitability remains the same. Looking forward to the remainder of the year the Group will update the markets when there is more visibility on short term trends but remains convinced that the outlook will improve in the mid-term.
|(€m)||H1 2009||H1 2008||Q2 2009||Q2 2008|
|H1 2009||Up to Standard||Under Development|
EBITAS* - earnings before interest, tax, amortisation of intangible assets and non-cash charge for share options
Full disclosure can be found in the Half Year Report 2009, including further management commentary, consolidated financial statements and accompanying summary notes.
The Half Year Report 2009 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 about 8,000 staff in more than 150 laboratories across 30 countries, Eurofins offers a portfolio of over 25,000 reliable analytical methods for evaluating the authenticity, origin, safety, identity, composition and purity of biological substances and products. The Group is committed to provide its customers with high quality services, accurate results in time and, if requested, expert advice by its highly qualified staff.
The Eurofins Group is one of the global market leaders in this field of applied life sciences. It intends to pursue its dynamic growth strategy and expand both its technology portfolio and its geographic reach. Through R&D, in-licensing 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 910251) Stock Exchanges (Reuters EUFI.LN, Bloomberg ERF FP, ESF, EUFI.DE).
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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