Regulatory News:
Eurofins Scientific SE (Paris:ERF):
Eurofins’ organic growth momentum remains robust:
- Reported revenues in 9M 2023 reached €4,821m, -4.2% vs 9M 2022
due to the sharp year-on-year decrease in revenues from COVID-19
testing and reagents (around €20m in 9M 2023 vs close to €540m in
9M 2022), a negative FX impact (-1.6%) and one public working day
fewer in 9M 2023.
- Adjusted for one public working day fewer in 9M 2023 (vs 9M
2022) and Q3 2023 (vs Q3 2022), organic revenue growth6 in the Core
Business (excluding COVID-19 related clinical testing and reagent
revenues) was 7.3% in 9M 2023 and 7.6% in Q3 2023:
- Q3 2023 marks the first quarter since the onset of the COVID-19
pandemic where, adjusted for the negative FX impact (€1,592m
without 2023 acquisitions in Q3 2023 vs €1,561m in Q3 2022), the
year-on-year increase in Core Business revenues more than
compensated for the year-on-year revenue decline from COVID-19
testing and reagents.
- Improving organic growth in Europe (9M 2023: 5.8%, Q3 2023:
6.9%) was led by Environment Testing and a gradual improvement in
Food Testing.
- Organic growth in North America (9M 2023: 9.5%, Q3 2023: 9.4%)
stayed resilient, supported by the continued strong development of
Environment Testing, Food Testing and Biopharma Product
Testing.
- Organic growth in Rest of the World (9M 2023: 5.2%, Q3 2023:
5.2%) remained at a solid level, led by diverse activities such as
BioPharma Services in India and new laboratories in Australia and
New Zealand.
- Start-ups contributed 0.7% to organic growth in 9M 2023, with
34 new start-up laboratories and 30 blood collection points opened
during the period.
- In view of the uncertain economic and geopolitical outlook,
Eurofins is approaching acquisitions even more carefully than
before and focusses on bolt-on deals that will provide appropriate
accretion to return on capital employed.
- Eurofins companies made numerous valuable, innovative
contributions to Testing for Life in Q3 2023:
- According to a recent study published in the Society of
Toxicology, Eurofins Discovery’s new SAFETYscan®47 platform has
proven its effectiveness as an alternative in vitro solution to
traditional animal in vivo risk assessments that fail to fully
replicate human in vivo mechanistic-related adverse events. The
platform addresses these issues by delivering human-relevant,
functional data with higher throughput and at lower costs.
- Eurofins Discovery’s recently launched DiscoveryAI™ tool
accelerates drug discovery through artificial intelligence.
Leveraging Eurofins Discovery’s high-quality proprietary dataset of
>2,500 compounds and >1m records collected over 10+ years,
the DiscoveryAI™ tool provides valuable data analytics to Eurofins
Discovery’s clients with the potential to reduce drug-to-market
time by at least 20%.
- Based on the outcomes of a multicentre clinical trial, DNA
Diagnostics Center’s Peekaboo™ Early Gender DNA Test was shown to
accurately determine foetal sex as early as six weeks gestation,
empowering parents with the earliest gender insight available and
revolutionising the prenatal experience.
Objectives
- Eurofins is confirming its objectives for FY 2023 to FY 2027 as
announced at the H1 2023 results presentation on 26 July 2023,
assuming all hypotheses below materialise:
€m
FY 2023
FY 2027
Revenues
€6.45bn – €6.55bn
Approaching €10bn
Adjusted1 EBITDA3
€1.32bn – €1.37bn
Margin: 24%
FCFF before investment in owned sites7
€670m - €720m
Approaching €1.5bn
- The FY 2023 objective assumes exchange rates prevailing for H1
2023 are constant for the remainder of the year, implying a
year-on-year headwind from foreign currency translation of ca.
€115m. It also assumes revenues from acquisitions of ca. €90m on a
consolidated basis and ca. €200m on a full year proforma
basis.
- The FY 2027 objective assumes exchange rates are stable vs 2022
average and zero contribution from COVID-19 testing and reagents.
To 2027, Eurofins targets average organic growth of 6.5% p.a. and
potential average revenues from acquisitions of €250m p.a. over the
period.
- Continued growth investments in the ownership of large
strategic sites, transfer of activities therein, start-ups and
bespoke proprietary IT solutions are expected to drive increased
profitability and cash generation over the mid-term horizon.
- With the aim of launching many new start-up laboratories (50 in
FY 2022, 34 in 9M 2023) and several new BCPs (18 in FY 2022, 30 in
9M 2023) in FY 2023, Eurofins expects Separately Disclosed Items2
(SDI) at the EBITDA level to be about €100m in FY 2023 and decline
thereafter towards less than 0.5% of revenues.
- Capital allocation priorities in FY 2023 and in the mid-term
will continue to include site ownership of high-throughput campuses
to complete Eurofins’ global hub and spoke network, start-ups in
high growth areas, development and deployment of sector-leading
proprietary IT solutions, and acquisitions. Investments in these
areas are key to our long-term value creation strategy. From FY
2023, investment in owned sites is assumed to be around €200m p.a.,
while net operating capex is expected to be ca. €400m p.a. (total
net capex4 of €600m p.a.).
- Eurofins targets to maintain a financial leverage of 1.5-2.5x
throughout the period and less than 1.5x by FY 2027.
- The speed of improvement towards the 2027 adjusted EBITDA
margin objective will depend on the timing of the bottoming out of
the food and consumer product end markets and how fast pricing can
be aligned to cost inflation as well as the speed of execution of
innovation, productivity improvement measures, digitalisation and
automation initiatives.
Comments from the CEO, Dr Gilles Martin:
“Despite the intensifying dynamics of the current difficult
geopolitical and economic environment, Eurofins companies continue
to deliver robust results, as demonstrated by the further
improvement in organic growth momentum in our Core Business
activities in Q3 2023. This performance was achieved not only due
to the resilience of our end markets and our diverse regional
portfolio, but also by the continued solid execution of our
strategy of innovating for our customers, investing in growing our
laboratory network and leveraging digitalisation and automation to
improve our service quality and our cost competitiveness. As a
result, Q3 2023 marks the first quarter since the onset of the
COVID-19 pandemic where, adjusted for the negative FX impact, the
year-on-year revenue growth of the Core Business more than
compensated for the year-on-year revenue decline from COVID-19
testing and reagents.
“Though we expect the economic climate to remain highly
uncertain for the remainder of this year and beyond, due to the
resilience of the essential markets we serve (food,
pharmaceuticals, water, etc.) and our leading market and
technological positions, we remain confident in our ability to
navigate these challenges and improve our relative position
compared to competitors.”
Conference Call
Eurofins will hold a conference call with analysts and investors
today at 15:00 CEST to discuss the results and the performance of
Eurofins, as well as its outlook, and will be followed by a
questions and answers (Q&A) session.
Click here to Join Call >>
No need to dial in. From any device, click the link above
to join the conference call. Alternatively, you may dial-in to the
conference call via telephone using one of the numbers below (full
list of dial-in numbers available here):
UK: +44 20 3355 4169 US: +1 844-985-2018 or +1 973-528-0038 FR:
+33 1 85 14 90 86 BE: +32 78482724 DE: +49 3222 1098517
Confirmation Code: 828879
Table 1: Organic Growth Calculation and Revenue
Reconciliation
In €m except otherwise stated
9M 2022 reported revenues
5,033
+ 2022 acquisitions - revenue part not
consolidated in 9M 2022 at 9M 2022 FX
115
- 9M 2022 revenues of discontinued
activities / disposals8
-64
= 9M 2022 pro-forma revenues (at 9M 2022
FX rates)
5,084
+ 9M 2023 FX impact on 9M 2022 pro-forma
revenues
-80
= 9M 2022 pro-forma revenues (at 9M
2023 FX rates) (a)
5,005
9M 2023 organic scope* revenues (at 9M
2023 FX rates) (b)
4,784
9M 2023 organic growth rate
(b/a-1)
-4.4%
2023 acquisitions - revenue part
consolidated in 9M 2023 at 9M 2023 FX
34
9M 2023 revenues of discontinued
activities / disposals8
3
9M 2023 reported revenues
4,821
In €m except otherwise stated
Q3 2022 reported revenues
1,622
+ 2022 acquisitions - revenue part not
consolidated in Q3 2022 at Q3 2022 FX
22
- Q3 2022 revenues of discontinued
activities / disposals8
-19
= Q3 2022 pro-forma revenues (at Q3 2022
FX rates)
1,624
+ Q3 2023 FX impact on Q3 2022 pro-forma
revenues
-63
= Q3 2022 pro-forma revenues (at Q3
2023 FX rates) (a)
1,561
Q3 2023 organic scope* revenues (at Q3
2023 FX rates) (b)
1,592
Q3 2023 organic growth rate
(b/a-1)
2.0%
2023 acquisitions - revenue part
consolidated in Q3 2023 at Q3 2023 FX
18
Q3 2023 revenues of discontinued
activities / disposals8
1
Q3 2023 reported revenues
1,611
* Organic scope consists of all companies
that were part of the Group as at 01/01/2023. This corresponds to
2022 pro-forma scope.
Table 2: Breakdown of Revenue by Operating Segment
€m
9M 2023
As % of total
9M 2022
As % of total
Y-o-Y variation %
Organic growth6 in the Core
Business**
Europe
2,435
50.5%
2,651
52.7%
-8.2%*
5.8%
North America
1,870
38.8%
1,851
36.8%
1.1%***
9.5%
Rest of the World
515
10.7%
531
10.6%
-3.0%
5.2%
Total
4,821
100%
5,033
100%
-4.2%
7.3%
€m
Q3 2023
As % of total
Q3 2022
As % of total
Y-o-Y variation %
Organic growth6 in the Core
Business**
Europe
813
50.4%
796
49.1%
2.1%*
6.9%
North America
628
39.0%
645
39.8%
-2.7%***
9.4%
Rest of the World
171
10.6%
180
11.1%
-5.3%
5.2%
Total
1,611
100%
1,622
100%
-0.6%
7.6%
* Segment most impacted by the sharp
decline in revenues from COVID-19 testing and reagents
** Excluding COVID-19 related clinical
testing and reagent revenues and adjusted for public working
days
*** Most impacted by negative FX
effect
1
Adjusted results – reflect the ongoing
performance of the mature9 and recurring activities excluding
“separately disclosed items”.
2
Separately disclosed items – include
one-off costs from integration and reorganisation, discontinued
operations, other non-recurring income and costs, temporary losses
and other costs related to network expansion, start-ups and new
acquisitions undergoing significant restructuring, share-based
payment charge5, impairment of goodwill, amortisation of acquired
intangible assets and negative goodwill, gains/losses on disposal
of businesses and transaction costs related to acquisitions as well
as income from reversal of such costs and from unused amounts due
for business acquisitions, net finance costs related to borrowing
and investing excess cash and one-off financial effects (net of
finance income), net finance costs related to hybrid capital and
the related tax effects.
3
EBITDA – Earnings before interest, taxes,
depreciation and amortisation, share-based payment charge,
acquisition-related expenses, net and gain and loss on disposal of
subsidiaries, net.
4
Net capex – Purchase of intangible assets,
property, plant and equipment, less proceeds from the disposal of
such assets and less capex trade payables change of the period.
5
Free Cash Flow to the Firm (FCFF) – Net
cash provided by operating activities, less Net capex.
6
Organic growth for a given period (Q1, Q2,
Q3, Half Year, Nine Months or Full Year) – non-IFRS measure
calculating the growth in revenues during that period between 2
successive years for the same scope of businesses using the same
exchange rates (of year Y) but excluding discontinued operations.
For the purpose of organic growth calculation for year Y, the
relevant scope used is the scope of businesses that have been
consolidated in the Group's income statement of the previous
financial year (Y-1). Revenue contribution from companies acquired
in the course of Y-1 but not consolidated for the full year are
adjusted as if they had been consolidated as of 1st January Y-1.
All revenues from businesses acquired since 1st January Y are
excluded from the calculation.
7
FCFF before investment in owned sites:
FCFF less Net capex spent on purchase of land, buildings and
investments to purchase, build or modernise owned sites/buildings
(excludes laboratory equipment and IT).
8
Discontinued activities / divestments:
discontinued operations are a component of the Group’s Core
Business or product lines that have been disposed of, or
liquidated; or a specific business unit or a branch of a business
unit that has been shut down or terminated, and is reported
separately from continued operations. For more information, please
refer to Note 2.26 of the Consolidated Financial Statements for the
year ended 31 December 2022 and to Note 2.6 of the Interim
Condensed Consolidated Financial Statements for the period ended 30
June 2023.
9
Mature scope: excludes start-ups and
acquisitions in significant restructuring. A business will
generally be considered mature when: i) The Group’s systems,
structure and processes have been deployed; ii) It has been
audited, accredited and qualified and used by the relevant
regulatory bodies and the targeted client base; iii) It no longer
requires above-average annual capital expenditures, exceptional
restructuring or abnormally large costs with respect to current
revenues for deploying new Group IT systems. The list of entities
classified as mature is reviewed at the beginning of each year and
is relevant for the whole year.
Notes to Editors:
For more information, please visit www.eurofins.com.
About Eurofins – the global leader in bio-analysis
Eurofins is Testing for Life. The Eurofins network of companies
believes that it is the global leader in food, environment,
pharmaceutical and cosmetic product testing and in discovery
pharmacology, forensics, advanced material sciences and agroscience
contract research services. It is also one of the market leaders in
certain testing and laboratory services for genomics, and in the
support of clinical studies, as well as in biopharma contract
development and manufacturing. It also has a rapidly developing
presence in highly specialised and molecular clinical diagnostic
testing and in-vitro diagnostic products.
With over 61,000 staff across a decentralised and
entrepreneurial network of ca. 900 laboratories in 61 countries,
Eurofins offers a portfolio of over 200,000 analytical methods to
evaluate the safety, identity, composition, authenticity, origin,
traceability and purity of a wide range of products, as well as
providing innovative clinical diagnostic testing services and
in-vitro diagnostic products.
Eurofins companies’ broad range of services are important for
the health and safety of people and our planet. The ongoing
investment to become fully digital and maintain the best network of
state-of-the-art laboratories and equipment supports our objective
to provide our customers with high-quality services, innovative
solutions and accurate results in the best possible turnaround time
(TAT). Eurofins companies are well positioned to support clients’
increasingly stringent quality and safety standards and the
increasing demands of regulatory authorities as well as the
evolving requirements of healthcare practitioners around the
world.
Eurofins has grown very strongly since its inception and its
strategy is to continue expanding its technology portfolio and its
geographic reach. Through R&D and acquisitions, the Group draws
on the latest developments in the field of biotechnology and
analytical chemistry to offer its clients unique analytical
solutions.
Shares in Eurofins Scientific are listed on the Euronext Paris
Stock Exchange (ISIN FR0014000MR3, Reuters EUFI.PA, Bloomberg ERF
FP).
Until it has been lawfully made public widely by Eurofins
through approved distribution channels, this document contains
inside information for the purpose of Regulation (EU) 596/2014 of
the European Parliament and of the Council of 16 April 2014 on
market abuse, as amended.
Important disclaimer:
This press release contains forward-looking statements and
estimates that involve risks and uncertainties. The forward-looking
statements and estimates contained herein represent the judgment of
Eurofins Scientific’s management as of the date of this release.
These forward-looking statements are not guarantees for future
performance, and the forward-looking events discussed in this
release may not occur. Eurofins Scientific disclaims any intent or
obligation to update any of these forward-looking statements and
estimates. All statements and estimates are made based on the
information available to the Company’s management as of the date of
publication, but no guarantees can be made as to their completeness
or validity.
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Investor Relations Eurofins Scientific SE Phone: +32 2 766 1620
E-mail: ir@eurofins.com
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