Sorin Group (MIL:SRN)
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 AndrÂ©-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.
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.
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 CompanyÂ™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 GroupÂ™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, StÂ¶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: www.sorin.com
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