(News Bulletin 247) – The results of the supplier of key technologies for drugs and vaccines suffered in the first quarter, while sales related to Covid-19 became anecdotal. Despite everything, the management maintains its forecasts for the current year, the effects of this normalization will be more than attenuated in the second half.

Less than a month after the takeover project deemed expensive by Polyplus, the market once again sanctions Sartorius Stedim Biotech. The supplier of key technologies for the design of drugs and vaccines thus displays one of the largest declines in the Parisian market, after announcing degraded quarterly results.

The 73.8% subsidiary of the German group Sartorius AG is still paying the price for a normalization of demand for its products used in the composition of vaccines and drugs against Covid-19. As a result, the action fell by more than 7% around 10:20 a.m. to 257 euros. Justified until 2021 by its exceptional growth, the comfortable valuation ratios of Sartorius Stedim Biotech, which had taken its capitalization above 50 billion euros, are no longer passed on to the market given the change in the market.

This poor performance was expected from Berenberg, whose analysts expected a complicated start to the year for the manufacturer of equipment for the health sector.

Standardization of demand

In recent years, activities related to Covid-19 and the accumulation of inventory by customers had triggered strong growth momentum for Sartorius Stedim Biotech. However, since the third quarter of 2022, the company has seen a normalization of demand for products dedicated to Covid-19. This decline in demand continued in the first quarter of 2023, resulting in a decline in sales and profits for Sartorius Stedim Biotech over the period.

Between January and March, Sartorius Stedim Biotech achieved sales of 726 million euros, down 17.2% at constant exchange rates and 18.4% on an organic basis. The group suffers from the comparison with an “exceptionally high level” recorded for the same period of the previous year. Excluding business related to the Covid-19 pandemic, the company says the decline in revenue is in the upper single-digit range.

On the order intake side, here too Sartorius Stedim Biotech is suffering the blow with the drop in activities linked to Covid-19. They fell by 37.5% to reach 601 million euros. These figures are mainly related to the reduction in inventory that customers had accumulated during the pandemic.

Current Ebitda (gross operating income) followed the same path and fell by 27.5% to 220 million euros, due to the drop in turnover and an increase in base prices. The corresponding margin eroded to 30.3% against 35.2% for the same period of the previous year. And on the profit side, it’s not much better. Net current income fell by 35% to 131 million euros, against 203 million euros in the first quarter of 2022.

Predictions confirmed

Despite this lackluster first quarter, management confirms its forecasts for the current fiscal year. Sartorius Stedim Biotech predicts that these demand normalization effects “will no longer play a significant role in the second half of the year.” The company hopes to see its consolidated turnover increase by a low single-digit percentage.

Excluding Covid-19-related activities, the company’s revenue growth is expected to be in the mid to high single-digit percentage range. The company estimates the contribution of the group’s acquisitions at around 1 point of growth, excluding the Polyplus takeover project. As for the current EBITDA margin, this should be approximately at the same level as the previous year, namely 35%.

“We launched, in the first quarter, an important acquisition process relating to the proposed takeover of the French company Polyplus, and we continued our ambitious investment program, which demonstrates our confidence in the substantial growth of the market. biopharmaceuticals. Innovative therapies are gaining momentum and customer pipelines are doing well, so we are well positioned to support their efforts to bring new drugs to market,” said René Fáber, CEO of Sartorius Stedim Biotech.