Sartorius AG (SARTF) Q3 2024 Earnings Call Highlights: Navigating Challenges with Strategic Growth

GuruFocus News
4 min read

In This Article:

  • Sales Revenue: Slightly negative at -2.8% reported, -2.0% FX adjusted for the first 9 months of 2024.

  • Order Intake: Increased by 6.6% in constant currencies to EUR 2.326 billion.

  • Underlying EBITDA Margin: 27.7% for the first 9 months; Q3 margin at 27.1%.

  • Cash Flow: Increased from EUR 91 million to EUR 280 million year-over-year.

  • CapEx: Down to 12.9% of sales after 3 quarters.

  • Net Debt: Reduced to EUR 3.946 billion.

  • Net Debt-to-EBITDA Ratio: 4.4 times after 9 months.

  • Regional Performance: EMEA growth at approximately 5%; Asia impacted by China; Americas affected by destocking.

  • Bioprocess Solutions (BPS) Order Intake: Up approximately 8% to EUR 1.836 billion in constant currency.

  • BPS Sales Growth: Flattish at -0.8% in constant currencies.

  • BPS Underlying EBITDA Margin: 28.9% for the first 9 months.

  • Lab Products & Services (LPS) Sales: Down by 6.5% in constant currencies.

  • LPS Underlying EBITDA Margin: 23.2%.

Release Date: October 17, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Sartorius AG (SARTF) confirmed its guidance for the full year 2024, indicating confidence in meeting its financial targets.

  • The company reported a significant increase in order intake, particularly in the Bioprocess Solutions division, which saw an 8% rise in constant currency.

  • Recurring sales showed a positive trend, with consumables experiencing double-digit growth over the first three quarters.

  • The efficiency program is expected to contribute more than EUR 100 million in 2024, with the most significant impact anticipated in Q4.

  • Cash flow improved significantly, reflecting effective working capital and CapEx management, with free cash flow reaching EUR 280 million for the year to date.

Negative Points

  • Sales revenue for the first nine months was slightly negative, with a 2.8% decline reported, reflecting challenges in the equipment business.

  • The LPS division experienced a 6.5% decline in sales in constant currencies, impacted by weak demand in China and global investment reluctance.

  • Underlying EBITDA margin decreased slightly due to lower production volumes and inventory reduction efforts.

  • The Americas region saw a nearly 10% decline in sales revenue, attributed to destocking effects and a soft equipment business.

  • The company faces ongoing challenges with customer investment reluctance, particularly affecting the equipment segment.

Q & A Highlights

Q: How did the mix in Bioprocess Solutions (BPS) orders develop in Q3 between consumables and equipment? A: Joachim Kreuzburg, Sartorius AG and Sartorius Stedim Biotech SA - IR, explained that there was a healthy recovery in demand for consumables, reflecting the reduction in stock levels by customers. However, there remains a reluctance to invest in equipment, leading to a mix trend favoring consumables.

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