STOCKHOLM, Sweden, April 18, 2002 (PRIMEZONE) -- Getinge:
-- Strong demand in the Surgical Systems and Infection Control
business areas
-- Orders received climbed 9% to SEK 2 167.6 million (1 985.9),
corresponding to a 7.5% organic growth.
-- Net sales amounted to SEK 1 909.2 million (1 919.0)
-- The operating profit totaled SEK 189.7 million (228.2)
-- The profit before tax was SEK 145.8 million (167.2)
-- Significantly improved cash flow during Q1
The Quarter
Demand continues to progress well for the Group as a whole. Organic growth was 7.5% during Q1. Volume growth was particularly good in the Surgical Systems and Infection Control business areas, which saw organic growth of 18 and 8 per cent respectively. Extended Care's organic orders received corresponded to last year's level, and should be viewed in relation to the very strong first quarter in 2001.
The Group's profit for the quarter fell back somewhat on the back of lower invoiced sales, which showed an organic 2% decline. The lower volumes are primarily related to Surgical Systems and Infection Control, and are due to a growing share of project deliveries with longer lead-times. Extended Care strengthened its operating profit and operating margin during the quarter.
Outlook
The Group's orders received continues to progress positively and at the close of Q1 the order book exceeded last year's level by SEK 400 million, the equivalent of a 22% rise. The market outlook remains positive for all business areas and the majority of geographical regions.
No changes have been made to the full year's earnings trend during Q1 and the forecast remains good.
Surgical Systems Business Area
Market Development
2002 2001 Change
Orders received per Q1 Q1
market
USA and Canada 111,7 99,5 12,3%
Great Britain 54,6 46,2 18,2%
Germany 137,2 149,0 -7,9%
Other Western 168,5 126,4 33,3%
Europe
Rest of the world 187,2 120,2 55,7%
Business area total 659,2 541,3 21,8%
adjusted for
currency flucs.&
corp.acqs 18,0%
Demand during Q1 was exceedingly good with organic growth of 18%. Orders received picked up on the North American market. In Europe the markets in Scandinavia, Benelux and France distinguished themselves, while the German market fell back somewhat after a strong opening at the beginning of 2001. Overall, the trend on the developing markets has been very good, as well as on the Japanese market.
Results
2002 2001 Change 2001
Q1 Q1 FY
Net sales, SEK Million 517,8 556,1 -6,9% 2 223,4
adjusted for currency
flucs.& corp.acqs -9,5%
Gross profit 237,9 266,0 -10,6% 1 108,9
Gross margin % 45,9% 47,8% -1,9% 49,9%
Operating cost, SEK Million -205,3 -205,2 0,0% -880,5
Operating profit 32,6 60,8 -46,4% 228,4
Operating margin % 6,3% 10,9% -4,6% 10,3%
Invoiced sales dropped organically by 9.5% during Q1 due to tendencies for projects with longer lead-times. Lower invoiced sales mean lower factory utilisation and consequently a somewhat falling gross margin. Costs are below the planned annual rate.
Activities
The merger of Maquet's and ALM's sales companies in France was completed during Q1, marking the completion of the restructuring measures introduced at the start of 2001.
Sale of ALM's Surgical Tables Business
As announced in an earlier press release, France's national competition authority has instructed Getinge to sell ALM's surgical tables business. Negotiations with potential buyers have now reached the final phase and it is thought the sale will be completed during the second half of 2002.
Acquisition of Heraeus Med Technology
During Q1, Getinge signed a letter of agreement to acquire Heraeus Med Technology, a German company with annual sales of around SEK 500 million. The acquisition is conditional to approval from the German national competition authority. The German authorities have decided to conduct an in-depth review of the proposed transaction and a decision is expected by the end of April 2002.
Infection Control business area
Market Development
2002 2001 Change
Orders received per Q1 Q1
market
Western Europe 375,4 344,3 9,0%
USA and Canada 324,9 298,5 8,8%
Asia/Australia 66,4 63,2 5,1%
Rest of the world 36,3 24,9 45,8%
Business area total 803,0 730,9 9,9%
adjusted for 8,2%
currency flucs.&
corp.acqs
The business area's orders received figure has continued its positive progress. Organic growth for Q1 was good, amounting to 8%. The organic volume increase of 5.4% for the North American market was satisfactory. Many of the Western European markets reported good growth, with the Great Britain, Scandinavia and Benelux distinguishing themselves. Overall, the developing markets showed very good progress.
Results
2002 2001 Change 2001
Q1 Q1 FY
Net sales, SEK Million 688,5 682,3 0,9% 3 204,3
adjusted for currency
flucs.& corp.acqs -0,9%
Gross profit 252,7 243,4 3,8% 1 153,7
Gross margin % 36,7% 35,7% 1,0% 36,0%
Operating cost, SEK Million -222,1 -192,2 15,6% -832,9
Operating profit 30,6 51,2 -40,2% 320,8
Operating margin % 4,4% 7,5% -3,1% 10,0%
Results for Q1 have fallen back somewhat. Invoiced sales dropped 1% organically during the quarter due to increasing sales to industrial customers meaning longer lead-times.
The gross margin has continued to strengthen in line with last year's close, and is due to the initial effects of the product standardisation project (WSP) and the positive synergy effects of integrating Maquet's Infection Control business activities.
Costs are developing according to plan and are higher than last year due to intensified marketing efforts and brand name rationalisation.
Activities
A global marketing organisation was formed during Q1. Christopher Hammer, a member of Getinge's Group management, is manager of the operation. He formerly held this position for non-North American markets. The intent of one global market organisation is to further enhance and coordinate the business area's sales and marketing efforts.
World Sterilizer Project
A number of restructuring measures have been implemented during Q1 in line with the business area's standardisation project for sterilizers. In the US, notification has been given that most of the mechanical production at the Rochester site will be closed down; production will focus on assembling US-adapted sterilizers. About 100 employees are affected by the changes. In addition, it was decided to close down sterilization production in France.
The restructuring scheme will be completed during the year. These measures will contribute to strengthening profits by SEK 60 - 70 million per year as of 2003. Net savings and restructuring costs amounting to SEK 25 million will be charged to the current year's profit. Restructuring costs have been insignificant during Q1.
Extended Care business area
Market Development
2002 2001 Change
Orders received per Q1 Q1
market
USA and Canada 248,9 240,0 3,7%
Great Britain 200,7 206,6 -2,9%
Germany 72,6 68,8 5,5%
Other Western 152,6 160,5 -4,9%
Europe
Rest of the world 19,9 20,4 -2,5%
Business area total 694,7 696,3 -0,2%
adjusted for -1,4%
currency flucs.&
corp.acqs
The business area's orders received were organically somewhat lower than last year, since the corresponding period was very strong. Volume trends on the North American market have been good, while Western Europe saw a lacklustre performance. Developments on the German market were good however.
Results
2002 2001 Change 2001
Q1 Q1 FY
Net sales, SEK Million 692,1 663,3 4,3% 2 655,5
adjusted for currency
flucs.& corp.acqs 3,1%
Gross profit 366,7 324,5 13,0% 1 307,1
Gross margin % 53,0% 48,9% 4,1% 49,2%
Operating cost, SEK Million -240,0 -209,8 14,4% -885,8
Operating profit 126,7 114,7 10,5% 421,3
Operating margin % 18,3% 17,3% 1,0% 15,9%
The business area improved its profit despite a weak volume trend. The improved gross margin is an effect of implemented product rationalisations and reduced production costs. Sales and marketing costs are according to plan and in line with the activities announced, aimed at greater market penetration and geographic expansion.
Activities
The shut down of the business area's production unit in Traverse City, Michigan, USA, will be completed during Q2. Annual savings will amount to SEK 6 million.
The project to develop a new range of ceiling hoists, a sector where the business area is under-represented, is going according to plan and the launch is scheduled for Q4 2002.
Next Report
The next report from the Getinge Group (Q2 2002) will be published on July 15, 2002.
A tele-conference will be held today at 2 p.m. Swedish time. To take part, please ring +44 (0) 20 8240 8240, codeword: Getinge.
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