At a meeting held today and chaired by Rosario Bifulco, the Sorin S.p.A.
(MIL:SRN) Board of Directors analyzed the results for the fourth quarter
2012 and the preliminary unaudited consolidated results for the year of
2012. The final draft of the financial statements for the year of 2012
will be approved by the Board of Directors at a meeting to be held on
March 14, 2013.
"In 2012 Sorin Group demonstrated the strength of its foundations in
successfully recovering from the consequences of the earthquakes in
Mirandola, in gaining shares in the CRM and heart valves markets,
despite challenging industry dynamics, and in generating approximately
€50 million in free cash flow to invest in its growth initiatives," said
André-Michel Ballester, Sorin Group's Chief Executive Officer. "The
Company is therefore well positioned in 2013 to regain its global
leadership in the oxygenators and autotransfusion segments, to
accelerate penetration of SonRTM and PercevalTM
and to continue implementing its long-term growth strategy," he added.
CONSOLIDATED RESULTS FOR THE FOURTH QUARTER 2012
In the fourth quarter of 2012, Sorin Group posted revenues of €190.8
PRELIMINARY CONSOLIDATED RESULTS FOR 2012
In 2012, Sorin Group reported revenues of €731.1 million,
a 1.7% decrease (as reported) compared to 2011. Revenues of the
product segments not impacted by the earthquakes increased by 5.3% (as
reported) or by 2.0%2 at constant foreign exchanges over 2011.
The heart-lung machines segment, which was not affected by the
earthquakes, posted record revenues for the fourth consecutive year,
further reinforcing the Company's leadership position in every major
The oxygenators and autotransfusion segments were impacted by the
earthquakes. As Sorin Group was able to restart production for both
product segments ahead of plan, the negative impact on revenues was
significantly lower than initially anticipated. The Company expects to
regain 100% of its market share in the oxygenators and autotransfusion
product segments by June 2013. During 2012, Sorin Group focused on the
manufacturing scale-up of the new family of oxygenators Inspire, which
the Company plans to roll-out in the first half of 2013.
In July 2012, Sorin Group acquired the US-based company, California
Medical Laboratories, a manufacturer of high quality cannulae, catheters
and accessories for cardiac surgery. This acquisition represents a
further strengthening of Sorin Group's competitive positioning in the
cannulae product segment, and follows the July 2011 acquisition of
Estech's minimally invasive cannulae product line.
The mechanical valves segment witnessed a decrease in revenues in line
with the continued shift of the market toward biological valves.
The tissue valves segment reported a 6.2%2 growth, driven by
the ongoing penetration of MitroflowTM in emerging markets
and the US, and the strong performance of PercevalTM , whose
annual revenues amounted to €8.4 million. During 2012, the Company
received CE mark for Perceval's proprietary MIS introducer, next
generation kit of accessories and extended indications (from patients
over the age of 75 to patients over 65).
In the second half of the year, Sorin Group received the US Food and
Drug Administration (FDA) approval for the Mitroflow Valsalva ConduitTM
and the Japanese Pharmaceuticals and Medical Devices Agency (PMDA)
approval for the MitroflowTM aortic valve in Japan.
The growth in the 'Other' segment was driven by the solid performance of
the annuloplasty rings, including the Memo 3D mitral repair ring
launched in Japan and other accessories for heart valve cardiac surgery.
During 2012, Sorin Group demonstrated its commitment to build a new
growth platform in percutaneous mitral valve therapies through two
selected investments. In July and November 2012, Sorin Group acquired,
respectively, a minority interest with option-to-buy in Cardiosolutions
and HighLife, companies both focused on the development of innovative
percutaneous systems to treat patients with mitral valve regurgitation.
As a result of the combination of Sorin's Cardiopulmonary and Heart
Valves divisions, the Company will start to report together, at the next
quarterly results release, the above revenues for the newly created
Cardiac Surgery Business Unit. For reference purposes, in 2012 the
Cardiac Surgery Business Unit reported revenues of approximately €445.9
million compared to €463.9 million in 2011.
The high-voltage segment performed well thanks to the ongoing
penetration of the innovative CRT SonR system, which allowed Sorin to
gain further share in this segment in Europe.
In the low-voltage segment, the Company maintained its competitive
position despite a decrease in revenues mainly attributable to a
slowdown in the US market, pricing pressure in Europe and reimbursement
changes in Japan.
The Company's commitment to innovation continued in 2012, with
significant marketing approvals and roll-out of key products including:
a new portfolio of leads in Europe and in the US, the PARADYM™ RF family
of implantable cardioverter defibrillators and cardiac resynchronization
devices with remote monitoring capabilities in the US, the SMARTVIEWTM
remote monitoring solution for patients with implantable cardiac devices
in Europe, and finally, the State Food and Drug Administration (SFDA)
approval and the commercial launch of the REPLYTM and ESPRITTM
families of pacemakers in China. During the year, the full results of
the CLEAR study were also published in Europace Advance Access, a peer
reviewed cardiology journal, and the first patients were enrolled in the
DREAM clinical study, aimed at evaluating the sensitivity and positive
predictive value of the Sleep Apnea Monitoring (SAM) feature in
Finally in 2012, Sorin Group confirmed its commitment to build a new
growth platform in neuromodulation therapies to treat heart failure.
During the year, the Company initiated the "Intense" collaborative R&D
project, which was selected for the Investissements d'Avenir
program by the French Government, and acquired the Belgian developer of
neurostimulation devices Neurotech. Both projects are highly
complementary and are aimed at the development of implantable medical
devices that stimulate the vagus nerve. Such programs, which follow the
2011 investment in Enopace Biomedical, represent important steps forward
in the implementation of the Company's long-term growth strategy.
Gross profit in 2012 was €443.5 million, or 60.7% of revenues,
compared to 60.2% of revenues in 2011. This improvement is mostly driven
by a favorable product mix and ongoing manufacturing efficiencies, which
more than offset the negative impact of the pricing pressure in CRM.
Selling, general and administrative (SG&A) expenses
were €310.1 million compared to €289.7 million in 2011. At constant
foreign-exchange rates, SG&A expenses increased by 1.1% or €3.2 million
in absolute terms. Notwithstanding the earthquakes and in order to
preserve the Company's ability to accelerate its recovery plan, Sorin
Group did not reduce its sales and marketing activities in the
Cardiopulmonary Business Unit.
Research and development (R&D) expenses were €75.4
million compared to €70.1 million in 2011. At constant foreign-exchange
rates, R&D expenses increased by 6.5% or €4.5 million in absolute terms.
R&D activity was primarily focused on the manufacturing scale-up of
InspireTM, the development of HeartlinkTM, the new
product releases of SonRTM and Remote Monitoring systems, the
clinical studies for the PercevalTM and Freedom SoloTM
valves and the Intense neuromodulation project.
EBITDA was €101. 8 million compared to €128.7 million in
2011. The Company estimates that the earthquakes had a negative impact
on EBITDA of approximately €31 million for the full year of 2012.
EBIT was €37.7 million compared to €87.7 million in 2011. EBIT
before special items was €58.0 million (€ 87.8 million in 2011). Special
items, totalling €20.3 million for 2012, include restructuring charges
for €7.9 million, non-recurring charges related to the earthquakes (such
as inventory and fixed assets write-off, costs for demolition and
reconstruction) for €13.4 million and extraordinary expenses related to
the write-off of in-process research & development for €7.5 million,
partly balanced by the partial indemnification for the earthquakes of
€13.75 million. This indemnification reflects a first instalment of €10
million received by the Company in July 2012 and a second instalment of
€3.75 million received in January 2013. The remaining non-recurring
charges refer to business development activities and legal fees and
Financial charges amounted to €12.8 million compared to €7.3
million in 2011. The full-year 2012 incorporates a financial charge of
€4.8 million for the unwinding of an over-hedging position resulting
from a lower revenue level following the earthquakes. On a run-rate
basis, interest expenses decreased by €1.4 million in 2012, mostly as a
result of lower average debt. Sorin's medium-long term debt, amounting
to €95.2 million at 2012 year-end, is financed by the European
Investment Bank and due in June 2014.
Net profit was €23.7 million compared to €58.0 million in 2011.
Adjusted net profit1 was €42.1 million compared
to €58.6 million in 2011. The Company estimates that the negative impact
on adjusted net profit related to the earthquakes amounted to
approximately €20 million for the full-year 2012.
Net financial debt as of December 31, 2012 was down to €87.8
million, compared to €105.9 million as of December 31, 2011 (€89.1
million as of September 30, 2012). Improvements in working capital were
partially offset by special items totalling €29.8 million. Special items
include €38.0 million associated to business development initiatives
related to the implementation of the Company's long-term growth strategy
(see attached table for details).
In 2012, the Company's free cash flow5 amounted
to €47.8 million. Sorin Group estimates that the negative cash impact
related to the earthquakes amounted to approximately €20 million,
including the first installment of €10 million of the partial insurance
Guidance for the current fiscal year
For 2013, the Company expects:
In 2013 the Company will focus on accelerating long-term growth through
the full market share recovery in the product segments affected by the
earthquakes, the commercial launch of InspireTM and HeartlinkTM,
the continued growth of SonRTM, the roll-out of PercevalTM
(which is expected to generate €13-153 million of sales), the
ongoing management of the Company's recent investments in innovation and
the geographic expansion in emerging markets.
For the first quarter of 2013, Sorin Group expects revenues of
approximately €178-180 million3.
* * *
The corporate officer responsible for 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
documented results and the accounting books and records.
In addition to the conventional indicators recommended by the IFRS,
this press release provides alternative performance indicators. These
indicators should not be considered as replacements for the conventional
indicators recommended by the IFRS, but rather as an additional source
of information, representative of the income statement, balance sheet
and financial position parameters used internally in the decision-making
process. An explanation of the meaning and structure of these
alternative performance indicators is provided in the Interim Report on
Operations at June 30, 2012.
This press release contains forward-looking statements. These
statements are based on the Group's current expectations and projections
about future events and, by their nature, are subject to inherent risks
and uncertainties. They relate to events and depend on circumstances
that may or may not occur or exist in the future, and, as such, undue
reliance should not be placed on them. Actual results may differ
materially from those expressed in such statements as a result of a
variety of factors, including: continued volatility and further
deterioration of capital and financial markets, changes in commodity
prices, changes in general economic conditions, economic growth and
other changes in business conditions, changes in laws and regulations
(both in Italy and abroad), and many other factors, most of which are
outside of the Company's control.
About Sorin Group
Sorin Group (www.sorin.com),
is a global medical device company and a leader in the treatment of
cardiovascular diseases. The Company develops, manufactures and markets
medical technologies for cardiac surgery and for the treatment of
cardiac rhythm disorders. With 3,750 employees worldwide, the Company
focuses on two major therapeutic areas: Cardiac Surgery (cardiopulmonary
products for open heart surgery and heart valve repair or replacement
products) and Cardiac Rhythm Management (pacemakers, defibrillators,
cardiac resynchronization devices). Every year, over one million
patients are treated with Sorin Group devices in more than 80 countries.
For more information, please visit: www.sorin.com
1 Adjusted net profit: net profit before the after-tax
treatment of non-recurring income and expenses (special items)
2 At comparable exchange rates and perimeter
3 Assuming exchange rates at current levels
4 See Sorin Group press release dated October 31, 2012
5 Free cash flow: net profit + depreciation, amortization and
writedowns ± ? working capital - investments. This account is net of the
impact of special items
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