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Sorin Group: The Board of Directors Approves the Results for the First Quarter Of 2005: Results in Line With Expectations

Milan, Italy (ots/PRNewswire)

  • Net Revenues Grow to 179.3 Million Euros in the First Quarter of 2005, or 1.8% More Than in the Same Period Last Year.(1)
  • EBITDA Total 16.5 Million Euros, Compared With 18.2 Million Euros in 2004, Improving 5.1% vs. Same Period Last Year (net of Exceptional Items of 2.5 Million Euros).
  • EBIT are 0.6 Million Euros, Compared With 2.3 Million Euros last year, improving vs. Same Period Last Year (net of Exceptional Items of 2.5 Million Euros).
  • Net Indebtedness Amounts to 336.3 Million Euros at March 31, 2005, Compared With 316.1 Million Euros at December 31, 2004, Consistent With CRM and VT Expansion Plans.
  • The implementation of the Industrial Restructuring Program is Continuing, and Sorin is Enjoying Solid Growth in Some Key Businesses (>+40% (1) Tissue Valves, >+30% (1) Defibrillators, >+60% (1) Stents). The FDA Approves the AAIsafeR2 Pacing System. MILAN, Italy
The Board of Directors of Sorin S.p.A met today in Milan under the
chairmanship of Umberto Rosa and approved the Report on Operations in
the First Quarter of 2005.
The Report, which was presented by Drago Cerchiari, Sorin's CEO,
shows a general positive progress of the development programs for new
products and markets, and of the cost reduction programs, which
support an improvement in the revenues composition (+1.8% vs. same
period last year (1)) the improvement of EBITDA to 16.5 million euros
and of EBIT to 0.6 million euros vs. results same period last year
that had included exceptional items of 2.5 million euros. The
positive effects of the development programs and of the cost
reduction programs will result during the rest of the year in a
significant profitability growth.
The Cardiac Surgery Business Unit (implantable devices and cardiac
surgery systems) had revenues of 102.4 million euros, or 1.5% less
than in the first three months of 2004.(1)
Sales of mechanical valves were up, reversing small declines in
the previous quarter and year. Tissue valves contributed a
significantly larger portion of the Business Unit's total revenues
(growth of more than 40% (1)), but shipments of oxygenators and
heart-lung machines were down, presumably due to temporary market
factors. In this market segment, work on products currently in the
development pipeline is progressing well and is expected to lead, by
mid-year, to the launch of a new adult oxygenator that was created by
combining the best technologies of COBE Cardiovascular and Dideco in
a single platform.
The Cardiac Rhythm Management Business Unit (implantable devices
that manage cardiac rhythm) reported revenues of 41.0 million euros
in the first three months of 2005, up 3.4% from the same period last
year.(1) The tachycardial segment (defibrillators and CRT-D)
continued to show healthy growth of more than 30%(1)), offsetting in
part the impact of weak market demand, which depressed sales in the
bradycardial segment (pacemakers). The European launch of the
Symphony AAIsafeR2 system in March provided fresh sales momentum and
enabled the Group to regain market share in the bradycardial segment
(pacemakers). On May 4, at the HRM Cardiology World Congress in New
Orleans, Sorin announced that the Symphony AAIsafeR2 system had been
approved by the Food and Drug Administration (FDA) and will soon be
introduced in the United States.
The Vascular Therapy Business Unit (drug-eluting and bare-metal
coronary stents, endovascular stents and catheters for angioplasty)
booked revenues of 8.8 million euros in the first quarter of 2005, or
60.4% more (1) than in the same period a year ago. The continuing
success of Janus - an innovative, polymer-free, drug-eluting stent
that received the CE mark on October 25, 2004 - is demonstrated by
its rising contribution to the Business Unit's revenue stream.
Enrolment in the Jupiter II clinical trial was completed at the end
of 2004, and preliminary effectiveness and safety results will be
announced at the next EuroPCR session (Paris, May 25-27).
Endovascular products also contributed to the Business Unit's strong
performance, posting a 15% revenue gain.(1)
The Renal Care Business Unit (biomedical devices to treat patients
with kidney diseases) had revenues of 27.6 million euros, for an
increase of 2.8% (1) compared with the first three months of 2004. At
the end  of April, the Business Unit made available to clinical
practitioners an innovative therapeutic system for the treatment of
sepsis that greatly increases the survival rates of patients
suffering from this condition.
A geographic breakdown of revenues shows that the North American
and International operations grew by 3.8% and 1.7%, respectively (on
a comparable basis).
Consolidated EBITDA of the Sorin Group totalled 16.5 million euros
in the first quarter of 2005, compared with 18.2 million euros in the
same period last year. However, excluding exceptional items of 2.5
million euros in Q1 04, inclusive of R&D grants, reported in Q1 04,
the Group's profitability improved from 8.8% in Q1 2004 to 9.2% in Q1
2005. The same considerations apply to EBIT, which amounted to 0.6
million euros (2.3 million euros in the first three months of 2004).
At March 31, 2005, the net indebtedness of the Sorin Group
totalled 336.3 million euros, compared with 316.1 million euros at
December 31, 2004. The rise in indebtedness reflects primarily an
increase in working capital requirements (due both to an expansion of
the Group's presence in markets and business segments in which it was
previously under represented and an inventory build-up in
anticipation of the transfer of production facilities) and the
initial cash outflows entailed by the restructuring program.
Lastly, the Board announced a plan for the industrial integration
the Group's Cardiopulmonary operations, which are part of the Cardiac
Surgery Business Unit. The purpose of the plan is to make production
processes more flexible, shorten the time to market for new products
and use resources more efficiently. The plan's strategic objectives
are:
  • Consolidate the oxygenator product lines on a single platform and offer the most advanced solution available in the worldwide market;
  • Develop an innovative integrated system of extracorporeal circulation that is patient oriented;
  • Further strengthen the Group's competitive position in the market for autologous transfusion systems (ATS) by leveraging its acknowledged world leadership in heart-lung machines (HLM).
Until now, the Sorin Group has operated in the cardiopulmonary
market segment through three separate companies: Cobe Cardiovascular,
Dideco and Stockert. In the future, the operations of these three
subsidiaries will be fully integrated at the global level. A new,
completely integrated unit will operate three manufacturing
facilities in Denver, Mirandola and Munich. The specific mission of
each of these facilities will be redefined, resulting in the
establishment of centres of excellence, the elimination of production
overlaps and the concentration of manufacturing activity at the most
efficient locations. The plan, which will be implemented immediately,
is expected to generate savings of 10 million euros by 2009 and will
have a significant positive impact on profitability as early as 2007.
The other projects included in the industrial restructuring and
cost-cutting program presented on November 12, 2004 are being carried
out on schedule.
The introduction of new products is also progressing according to
plan. In addition to the new oxygenator and the AAIsafeR2 system
mentioned above, new products that are slated for market launch in
the second half of the year include the Ovatio and NewLiving CHF
product lines by the CRM Business Unit and the new S5 heart-lung
machine by the CS Business Unit.
With regard to the transition to the International Accounting
Principles (IAS/IFRS), the Sorin Group opted for the transitional
alternative allowed under Articles 81-bis and 82-bis of Consob
Resolution No. 14990 of April 14, 2005. Accordingly, it has prepared
the first quarterly report of 2005 and will prepare the report for
the second quarter of the year and the semi-annual report in
accordance with the same Italian accounting principles it used to
prepare its 2004 consolidated financial statements.
The Project for the Transition to International Accounting
Principles is currently being implemented. At this point, however, it
is still too early to provide quantitative data on the effects of
this transition.
The Sorin Group (Reuters code: 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
companies of the Sorin Group are: Bellco, CarboMedics, COBE
Cardiovascular, Dideco, ELA Medical, Mitroflow, Soludia, Sorin
Biomedica and Stockert. The Sorin Group has about 4,800 employees
working at facilities in more than 80 countries throughout the world
to serve over 5,000 public and private treatment centres.
For additional information, please visit our website:
www.sorin.com
    Sorin Group
    Consolidated Operating Results
    (amounts in millions of euros)
                                                  1st quarter     1st quarter
                                                     2005            2004
    Production value (1)                             184.8           192.3
    Cost of raw materials, outside services and
    miscellaneous operating costs                   (103.8)         (110.7)
    Value added generated                             81.0            81.6
    Personnel expense                                (64.5)          (63.4)
    EBITDA                                            16.5            18.2
    Depreciation, amortisation and writedowns (i)    (15.3)          (15.6)
    Provisions for risks and charges                  (0.6)           (0.3)
    Net production value (EBIT)                        0.6             2.3
    (1) includes net revenues totalling              179.3           178.2
(i) Includes 3.5 million euros in amortisation of goodwill,
compared with 3.7 million euros in the first quarter of 2004.
    Sorin Group
    Consolidated Financial Position
    (amounts in millions of euros)
                                                         3/31/05    12/31/04
    Short-term financial assets
    Liquid assets                                          28.0        18.4
    Loans receivable
     - Short-term financial receivables                    61.5        54.8
     - Long-term financial receivables                       --          --
     - Financial accrued income and prepaid expenses        2.6         1.5
     Total financial assets                                92.1        74.7
     - Short-term financial payables                     (217.1)     (151.3)
     - Long-term financial payables                      (231.9)     (259.9)
     - Financial accrued expenses and deferred income      (5.5)       (3.9)
    Total financial liabilities                          (454.5)     (415.1)
    Gross indebtedness                                   (362.4)     (340.4)
    Factoring of receivables with and
    without recourse                                       26.1        24.3
    Net Indebtedness                                     (336.3)     (316.1)
(1) On a comparable foreign exchange translation basis.

Contact:

Marilena Giavara, Director, Corporate Communications & Investor
Relations, Tel. +39-02-6332201, e-mail: marilena.giavara@sorin.com.
Laura Villa, Investor Relations Manager, Tel. +39-02-6332316, e-mail:
laura.villa@sorin.com