Sartorius Reviews Performance during Fiscal 2003
Consolidation Drive Takes Effect; Ambitious Targets for 2004
In its consolidation drive, the Sartorius Group achieved striking success, and is striving to considerably increase sales revenue and double its operating earnings (EBIT) in the current year. Spokesman of the Executive Board and Group CEO Dr. Joachim Kreuzburg announced this at the annual press conference for the company results in Goettingen, Germany. "In 2003, we improved our cost structures for the long term and, despite substantial extraordinary expenses, were able to increase our earnings and lower debt by more than 20%. For 2004, our major targets will be to further improve our profitability along with reporting correspondingly higher earnings. To achieve this, we need to continue boosting efficiency, and earn additional gross profit margins from our planned sales revenue growth," stated Kreuzburg. Unlike in the year 2003, he said he does not expect extraordinary expenses to negatively impact earnings. However, he does think it is debatable whether the economic rebound needed will actually occur. In addition, the euro, which is strong in comparison to the previous years, will continue to impact earnings in his opinion. "Overall, the competition in our markets will become tougher. To achieve our goal of attaining appropriate profitability, we will need to make considerable efforts in future as well. Through our innovative strength, our global presence and our customer focus, we are positioned well above average to meet these challenges."
Consolidated Earnings
In 2003, the Sartorius Group increased earnings before interest and taxes, EBIT, by 8.6% to 14.7 million euros from 13.5 million euros a year ago. At 37.7 million euros, earnings before interest, taxes, depreciation and amortization, EBITDA, was 3.9 % higher than the previous year's figure of 36.3 million euros. These earnings contain one-time extraordinary expenses of about 5 million euros for restructuring measures and of approx. 3 million euros as a result of the insolvency of the minority stake Diessel GmbH & Co. KG. At an EBIT of 7.6 million euros (previous year incl. Environmental Technology: 13.2 million euros), the Biotechnology Division contributed the larger share to the Group's earnings. Achieving an EBIT of 7.1 million euros, the Mechatronics Division significantly increased earnings over the 0.3 million euros posted the year before. Earnings per share are 0.26 euro cents following 0.23 euro cents in 2002. Spokesman of the Executive Board and Group CEO Kreuzburg assessed the increase in fourth-quarter earnings as confirmation of the consolidation drive initiated in 2003.
Sales Revenue and Order Intake
Sales revenue of the Sartorius Group in 2003 decreased 7.2% to 442.3 million euros from 476.5 million euros in 2002, particularly because of the impact of foreign exchange rates. The Biotechnology Division posted a decline in sales revenue of 10.4% to 227.1 million euros from 254.6 million euros a year earlier; sales revenue of the Mechatronics Division slipped 3.1% to 215.1 million euros from 221.9 million euros a year ago. Adjusted for the impact of foreign currencies, consolidated sales revenue at 470.0 million euros nearly attained the previous year's level. In addition, considering the two large fermenter business projects of a total volume of approx. 25 million euros, which were completed in the previous year, both divisions posted operating growth in the year under review; the Group reported overall growth of more than 4%. Corresponding growth of the Biotechnology Division was roughly 5.5%; that of the Mechatronics Division, 2.5% compared to the previous year. Order intake slid 5.3% to 435.3 million euros; adjusted for the impact of foreign exchange rates, it was 1.8% higher than last year's figure, however. Thus, Sartorius achieved good operating results in a difficult market environment.
Research and Development
Despite its consolidation drive, Sartorius increased R&D spending from 23.0 million euros to 25.2 million euros in fiscal 2003. As a result, the ratio of R&D costs to sales revenue rose from 4.8% to 5.7%.
Employees
On December 31, 2003, the number of employees within the Sartorius Group was 3,661, 80 persons fewer than a year ago. Staff levels were primarily adjusted at Sartorius AG's Goettingen location; this was associated with the necessary changes in cost structures.
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