Turnaround concept "Fit for Future" concluded, implementation already started
Cryo-Save Group N.V. (Euronext: CRYO, 'Cryo-Save', or 'the Group'), the leading international stem cell storage company and the largest family stem cell bank in Europe, has published its financial results for the six months ended 30 June 2013.
The economy in Cryo-Save's main markets remained depressed during the first half of 2013. This has significantly stalled new client acquisitions. Cost savings as announced in 2012 materialized but were not sufficient to offset the bottom line impact of the slowdown of the revenues. In addition, gross profit margin was under pressure and declined by increasing collection and transport cost.
Significantly lower revenues (-16%) and gross profit margin pressure resulted in a gross profit of €9.8m (1HY 2012: €12.5m). The impact of the 2012 cost savings programs (€2.0m) was not sufficient to offset this decline in gross profit. In addition, the operating expenses were impacted by severances (€0.4m) and by additional legal and consulting expenses (€0.3m). As a result EBITDA ended at -€0.1m (1 HY 2012: €0.2m, including €0.8m restructuring expenses). The total number of employees, denominated in full time equivalents, decreased from 259 at the end of December 2012 to 226 at 30 June 2013.
Ultimo 2012 Cryo-Save started a turnaround to regain profitable growth. During the first half of 2013 a renowned strategy consultant company was engaged for an identification of further measures to restore profitability as well as an in-depth analysis of the Group's strategic objectives for the mid to longer term. This analysis reconfirms that Cryo-Save is active in a market that holds a strong future promise as the conditions treatable with stem cells as well as clinical trial activities are increasing continuously. The organisational structure will be further adjusted to the appropriate scale and the effectiveness of the Sales & Marketing operations will be further optimised.
The group will swing back to profitability by year-end based on driving awareness aimed at the consumer, improving the effectiveness of all sales channels in combination with strict cost saving programs, improved working capital management and disposal of loss-making foreign operations. The turnaround program will lead to a sustainable profitable future and a healthy upside from the next wave of growth of stem cell therapy. In the mid-term, management will develop the company towards a multi-service provider in order to maintain its leadership in this industry.
The Group reached agreement to sell its property in Lyon in August 2013. The proceeds of the sale (€2.3m) will be added to the cash reserves, since the property was debt free. The Group recorded an additional non-cash impairment charge of €0.7m.
The Group had a solid cash position of €5.3 million as at 30 June 2013.
Evi Mattil, Chief Executive Officer a/i, commented:
"This has been a challenging period for Cryo-Save, with no clear signs of economic recovery in our key markets.
"Our turnaround plan is already underway. We are focussing our strategy to concentrate more on selling direct to the consumer, are scaling down our cost base and optimizing our commercial operations to capture the growth opportunities that we believe the market still holds.
"We expect the swift action we have taken to bring the Group back to profitability by the end of the year".
