Sorin Group (MIL:SRN)

  • In Q2 08 Revenues were 196.3 million Euros, up 1.9%(*)(**) as compared with the same period in 2007;
  • EBIT during the quarter was 20.8 million Euros versus – 28.4 million Euros in the same period last year. Excluding non-recurring items, EBIT was 11.9 million Euros, or 6.1% of revenues, versus 9.1 million Euros (4.4% of revenues) in Q2 07;
  • EBITDA margin was 11.6%, up from 11.0% during the same quarter of 2007; both EBIT and EBITDA margins improved in comparison with the previous year, despite FX material adverse impact;
  • Net Debt as of June 30, 08 was 270.7 million Euros versus 309.9 million Euros as of June 30, 07.
  • 2008 full-year guidance confirmed

The Board of Directors of Sorin S.p.A. in a meeting today chaired by Umberto Rosa, analyzed the preliminary financial results for the second quarter of 2008, which closed on June 30. Final First Half Results will be approved by the Board of Directors meeting to be convened on August 26th, as originally announced.

We are proud that we have results in Q2 which are at or above previously given guidance. We will maintain our focus on improving profitability and reducing net debt while continuing to invest in innovative technologies for our core cardio-vascular businesses, said Andr©-Michel Ballester, Chief Executive Officer.

During the period, Sorin Group posted Revenues of 196.3 Euros million, up 1.9%(*)(**) over the same period in 2007. Foreign exchange negatively impacted revenues in the quarter by 8.7 million Euros.

  • The Cardiopulmonary Business Unit reported revenues at 76.2 million Euros, up 1.4%(*)(**) from the same period in 2007. Sales of Heart-Lung Machines were 13 million Euros during the quarter, down 5.9%(**) against the same period in 2007. In the Oxygenator segment revenues were 49 million Euros, up 0.9%(*)(**) as compared with Q2 07. The company has maintained its global market share in these segments during the quarter. The Autotransfusion business was up 8.4%(*)(**) to 15 million Euros thanks to increased adoption of the technology by surgeons around the world. The company expects that the combined launch of the S5TM Heart-Lung Machine in Japan and of the Kids D101TM Infant Oxygenator worldwide will contribute to maintaining a similar sales momentum for the rest of the year.
  • The Cardiac Rhythm Management Business Unit (implantable devices that manage cardiac rhythm disorders) reported revenues of 59.6 million Euros during the quarter, down 1.5%(**) from Q2-07. Sales rose 6.0%(**) in the High Voltage segment (OvatioTM defibrillators and CRT-D) to 18 million Euros while the Low Voltage segment (SymphonyTM and ReplyTM pacemakers) was down 5.7%(**) during the quarter to 39 million Euros.

As during Q1, Q2 sales were impacted by management decisions to discontinue USD based sales in unprofitable countries and to restructure its sales force in the United States. They were also impacted by a temporary change in the reimbursement for the SymphonyTM pacemakers in France.

The company expects the launch of OvatioTM CRT-D in the US, of the new generation CRT-D device in Europe and of ReplyTM in Japan to accelerate sales growth in the second part of the year, albeit at a pace slower than originally planned.

  • The Heart Valves Business Unit (including mechanical and tissue heart valves, as well as valve repair products) reported revenues of 28.0 million Euros, up 12.8%(**). The Tissue Heart Valves segment revenues were up 48.0%(**) to 10 million Euros, fuelled by a growing penetration of the MitroflowTM valve in the US. In the Mechanical Heart Valves segment revenues declined 1.0%(**), to 16 million Euros reflecting a stable market share position globally. The company expects growth in the heart valves business to accelerate further in the second half of 2008, exceeding previous expectations.
  • The Vascular Therapy Business Unit (drug-eluting and bare-metal coronary stents, endovascular stents and catheters for angioplasty) posted revenues of 6.5 million Euros in the second quarter, down 11.2%(**) as compared with the same period in 2007. The Renal Care Business Unit (biomedical devices used to treat patients with kidney diseases) had revenues of 25.5 million Euros during the quarter, flat(**) as compared to 2Q-07. Both businesses performed according to expectations.

Gross Profit was 100.3 million Euros in Q2 08, or 51.0% of revenues (compared to 105.6 million Euros, or 51.5% of revenues, for the same quarter of 2007). Improvement in manufacturing efficiency was offset by unfavourable FX impact. However, the company expects that the combined impact of its cost reduction initiatives program and a better product mix will help improve gross margin in H2 08 as compared with H2 07.

As a result of the ongoing cost reduction programs, SG&A expenses during the quarter declined to 73.4 million Euros (37.4% of revenues) from 83.1 million Euros for the same period of 2007 (40.5% of revenues).

Research and Development expenses were 15.0 million Euros, or 7.6% of revenues, up from 6.7% in Q2 07, highlighting the Company™s efforts to maintain a strong commitment to innovation in its three core cardiovascular businesses.

EBIT during the second quarter of 2008 was 20.8 million Euros, or 10.6% of revenues, compared to – 28.4 million Euros in the same period for 2007. EBIT was impacted during Q2 08 by a non-recurring profit of 8.9 million Euros on the disposal of the peripheral stent business. Excluding non-recurring items, EBIT was 11.9 million Euros, or 6.1% of revenues, in comparison with 9.1 million Euros, or 4.4% of revenues, in Q2 07.

EBITDA amounted to 22.7 million Euros (11.6% of revenues) in the quarter, compared to 22.6 million Euros (11.0% of revenues) during the same quarter of 2007.

This improvement in profitability was generated despite the material adverse impact of FX of approximately 2 million Euros in the quarter.

Net earnings in the first half 2008 were 14.1 million Euros in comparison with – 36.3 million Euros in 2007. Excluding non-recurring items, net earnings were 5.3 million Euros in H1 08 in comparison with net earnings of 1.2 million Euros in the same period last year.

The Group™s Net Debt as of June 30, 2008 was 270.7 million Euros in comparison with 309.9 million Euros as of June 30, 2007 and 318.2 million Euros as of March 31, 2008. Net Debt was positively impacted by non-recurring items for a total of 25 million Euros, stemming in particular from the true sale of European receivables within a 5 year revolving and without recourse factoring program which impacted for 32,7 million Euros and the divestiture of the peripheral stent business for 7.0 million Euros. Conversely, the net financial position was also negatively impacted by various restructuring related expenditures and others for 14.7 million Euros.

The Company confirms guidance previously communicated for full-year 2008.

During Q3 08 revenues are expected to be substantially constant(*)(**) by comparison with same period last year. EBITDA and EBIT margins are expected to be in the range of 8.5-9.0% and 3.0-3.5% of revenues, respectively, significantly improving over same period last year (7.4% and 0.8% of revenues, respectively) despite an FX material adverse impact. Net Debt at the end of Q3 08 is expected to be below 290 million Euros, significantly lower than at the end of Q3 07 (328.9 million Euros).

The manager responsible for preparing the company’s financial reports, Demetrio Mauro, declares, pursuant to paragraph 2 of Article 154 bis of the Consolidated Law on Finance, that the accounting information contained in this press release corresponds to the document results, books and accounting records.


(*) net of sales to subcontractors

(**) At comparable foreign exchange rates

About Sorin Group

The Sorin Group (Bloomberg: SRN.IM; Reuters: 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 Sorin Group includes these brands: Dideco, CarboMedics, COBE Cardiovascular, St¶ckert, Mitroflow, ELA Medical, Sorin Biomedica, Bellco and Bellco-Soludia. At the Sorin Group, 4,500 employees work to serve over 5,000 public and private treatment centers in more than 80 countries throughout the world. For more information, please visit:

Sorin Group
Martine Konorski
Director, Corporate Communications
Tel. +39 348 2663548
Carla Vidra
Investor Relations
Tel. +39 02 69969716