Sorin Group: The Board of Directors Approves the Results for the First Quarter Of 2005: Results in Line With Expectations
Milan, Italy (ots/PRNewswire)
- Net Revenues Grow to 179.3 Million Euros in the First Quarter of 2005, or 1.8% More Than in the Same Period Last Year.(1)
- EBITDA Total 16.5 Million Euros, Compared With 18.2 Million Euros in 2004, Improving 5.1% vs. Same Period Last Year (net of Exceptional Items of 2.5 Million Euros).
- EBIT are 0.6 Million Euros, Compared With 2.3 Million Euros last year, improving vs. Same Period Last Year (net of Exceptional Items of 2.5 Million Euros).
- Net Indebtedness Amounts to 336.3 Million Euros at March 31, 2005, Compared With 316.1 Million Euros at December 31, 2004, Consistent With CRM and VT Expansion Plans.
- The implementation of the Industrial Restructuring Program is Continuing, and Sorin is Enjoying Solid Growth in Some Key Businesses (>+40% (1) Tissue Valves, >+30% (1) Defibrillators, >+60% (1) Stents). The FDA Approves the AAIsafeR2 Pacing System. MILAN, Italy
The Board of Directors of Sorin S.p.A met today in Milan under the chairmanship of Umberto Rosa and approved the Report on Operations in the First Quarter of 2005.
The Report, which was presented by Drago Cerchiari, Sorin's CEO, shows a general positive progress of the development programs for new products and markets, and of the cost reduction programs, which support an improvement in the revenues composition (+1.8% vs. same period last year (1)) the improvement of EBITDA to 16.5 million euros and of EBIT to 0.6 million euros vs. results same period last year that had included exceptional items of 2.5 million euros. The positive effects of the development programs and of the cost reduction programs will result during the rest of the year in a significant profitability growth.
The Cardiac Surgery Business Unit (implantable devices and cardiac surgery systems) had revenues of 102.4 million euros, or 1.5% less than in the first three months of 2004.(1)
Sales of mechanical valves were up, reversing small declines in the previous quarter and year. Tissue valves contributed a significantly larger portion of the Business Unit's total revenues (growth of more than 40% (1)), but shipments of oxygenators and heart-lung machines were down, presumably due to temporary market factors. In this market segment, work on products currently in the development pipeline is progressing well and is expected to lead, by mid-year, to the launch of a new adult oxygenator that was created by combining the best technologies of COBE Cardiovascular and Dideco in a single platform.
The Cardiac Rhythm Management Business Unit (implantable devices that manage cardiac rhythm) reported revenues of 41.0 million euros in the first three months of 2005, up 3.4% from the same period last year.(1) The tachycardial segment (defibrillators and CRT-D) continued to show healthy growth of more than 30%(1)), offsetting in part the impact of weak market demand, which depressed sales in the bradycardial segment (pacemakers). The European launch of the Symphony AAIsafeR2 system in March provided fresh sales momentum and enabled the Group to regain market share in the bradycardial segment (pacemakers). On May 4, at the HRM Cardiology World Congress in New Orleans, Sorin announced that the Symphony AAIsafeR2 system had been approved by the Food and Drug Administration (FDA) and will soon be introduced in the United States.
The Vascular Therapy Business Unit (drug-eluting and bare-metal coronary stents, endovascular stents and catheters for angioplasty) booked revenues of 8.8 million euros in the first quarter of 2005, or 60.4% more (1) than in the same period a year ago. The continuing success of Janus - an innovative, polymer-free, drug-eluting stent that received the CE mark on October 25, 2004 - is demonstrated by its rising contribution to the Business Unit's revenue stream. Enrolment in the Jupiter II clinical trial was completed at the end of 2004, and preliminary effectiveness and safety results will be announced at the next EuroPCR session (Paris, May 25-27). Endovascular products also contributed to the Business Unit's strong performance, posting a 15% revenue gain.(1)
The Renal Care Business Unit (biomedical devices to treat patients with kidney diseases) had revenues of 27.6 million euros, for an increase of 2.8% (1) compared with the first three months of 2004. At the end of April, the Business Unit made available to clinical practitioners an innovative therapeutic system for the treatment of sepsis that greatly increases the survival rates of patients suffering from this condition.
A geographic breakdown of revenues shows that the North American and International operations grew by 3.8% and 1.7%, respectively (on a comparable basis).
Consolidated EBITDA of the Sorin Group totalled 16.5 million euros in the first quarter of 2005, compared with 18.2 million euros in the same period last year. However, excluding exceptional items of 2.5 million euros in Q1 04, inclusive of R&D grants, reported in Q1 04, the Group's profitability improved from 8.8% in Q1 2004 to 9.2% in Q1 2005. The same considerations apply to EBIT, which amounted to 0.6 million euros (2.3 million euros in the first three months of 2004).
At March 31, 2005, the net indebtedness of the Sorin Group totalled 336.3 million euros, compared with 316.1 million euros at December 31, 2004. The rise in indebtedness reflects primarily an increase in working capital requirements (due both to an expansion of the Group's presence in markets and business segments in which it was previously under represented and an inventory build-up in anticipation of the transfer of production facilities) and the initial cash outflows entailed by the restructuring program.
Lastly, the Board announced a plan for the industrial integration the Group's Cardiopulmonary operations, which are part of the Cardiac Surgery Business Unit. The purpose of the plan is to make production processes more flexible, shorten the time to market for new products and use resources more efficiently. The plan's strategic objectives are:
- Consolidate the oxygenator product lines on a single platform and offer the most advanced solution available in the worldwide market;
- Develop an innovative integrated system of extracorporeal circulation that is patient oriented;
- Further strengthen the Group's competitive position in the market for autologous transfusion systems (ATS) by leveraging its acknowledged world leadership in heart-lung machines (HLM).
Until now, the Sorin Group has operated in the cardiopulmonary market segment through three separate companies: Cobe Cardiovascular, Dideco and Stockert. In the future, the operations of these three subsidiaries will be fully integrated at the global level. A new, completely integrated unit will operate three manufacturing facilities in Denver, Mirandola and Munich. The specific mission of each of these facilities will be redefined, resulting in the establishment of centres of excellence, the elimination of production overlaps and the concentration of manufacturing activity at the most efficient locations. The plan, which will be implemented immediately, is expected to generate savings of 10 million euros by 2009 and will have a significant positive impact on profitability as early as 2007.
The other projects included in the industrial restructuring and cost-cutting program presented on November 12, 2004 are being carried out on schedule.
The introduction of new products is also progressing according to plan. In addition to the new oxygenator and the AAIsafeR2 system mentioned above, new products that are slated for market launch in the second half of the year include the Ovatio and NewLiving CHF product lines by the CRM Business Unit and the new S5 heart-lung machine by the CS Business Unit.
With regard to the transition to the International Accounting Principles (IAS/IFRS), the Sorin Group opted for the transitional alternative allowed under Articles 81-bis and 82-bis of Consob Resolution No. 14990 of April 14, 2005. Accordingly, it has prepared the first quarterly report of 2005 and will prepare the report for the second quarter of the year and the semi-annual report in accordance with the same Italian accounting principles it used to prepare its 2004 consolidated financial statements.
The Project for the Transition to International Accounting Principles is currently being implemented. At this point, however, it is still too early to provide quantitative data on the effects of this transition.
The Sorin Group (Reuters code: SORN.MI), 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. The companies of the Sorin Group are: Bellco, CarboMedics, COBE Cardiovascular, Dideco, ELA Medical, Mitroflow, Soludia, Sorin Biomedica and Stockert. The Sorin Group has about 4,800 employees working at facilities in more than 80 countries throughout the world to serve over 5,000 public and private treatment centres.
For additional information, please visit our website: www.sorin.com
Sorin Group
Consolidated Operating Results
(amounts in millions of euros)
1st quarter 1st quarter
2005 2004
Production value (1) 184.8 192.3
Cost of raw materials, outside services and
miscellaneous operating costs (103.8) (110.7)
Value added generated 81.0 81.6
Personnel expense (64.5) (63.4)
EBITDA 16.5 18.2
Depreciation, amortisation and writedowns (i) (15.3) (15.6)
Provisions for risks and charges (0.6) (0.3)
Net production value (EBIT) 0.6 2.3
(1) includes net revenues totalling 179.3 178.2(i) Includes 3.5 million euros in amortisation of goodwill, compared with 3.7 million euros in the first quarter of 2004.
Sorin Group
Consolidated Financial Position
(amounts in millions of euros)
3/31/05 12/31/04
Short-term financial assets
Liquid assets 28.0 18.4
Loans receivable
- Short-term financial receivables 61.5 54.8
- Long-term financial receivables -- --
- Financial accrued income and prepaid expenses 2.6 1.5
Total financial assets 92.1 74.7
- Short-term financial payables (217.1) (151.3)
- Long-term financial payables (231.9) (259.9)
- Financial accrued expenses and deferred income (5.5) (3.9)
Total financial liabilities (454.5) (415.1)
Gross indebtedness (362.4) (340.4)
Factoring of receivables with and
without recourse 26.1 24.3
Net Indebtedness (336.3) (316.1)(1) On a comparable foreign exchange translation basis.
Contact:
Marilena Giavara, Director, Corporate Communications & Investor
Relations, Tel. +39-02-6332201, e-mail: marilena.giavara@sorin.com.
Laura Villa, Investor Relations Manager, Tel. +39-02-6332316, e-mail:
laura.villa@sorin.com