• Revenue: EUR3.4 billion, with a slight increase of 0.1% in constant currencies.
• Order Intake: Double-digit increase, particularly strong in consumables.
• Underlying EBITDA Margin: 28.0%, with EUR945 million in absolute terms.
• Regional Performance: EMEA growth of 5.5%, Americas impacted by temporary industry trends, Asia Pacific growth of 1.4%.
• Free Cash Flow: Doubled to EUR550 million from EUR271 million in the prior year.
• CapEx: Reduced to 12.1% of sales from 16.5% in the prior year.
• Net Debt: EUR3.746 billion, with a leverage ratio of 4.0.
• Bioprocess Solutions Sales: EUR2.7 billion, with recurring business showing mid-single-digit growth.
• Lab Products & Services Sales: Down 3% in constant currencies, with challenges in China.
• Net Operating Cash Flow: Increased by 9.2% to EUR850 million.
• CapEx for R&D and Infrastructure: EUR340 million, with a CapEx ratio of 12.2%.

• Warning! GuruFocus has detected 4 Warning Signs with SARTF.

Release Date: January 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Sartorius AG (SARTF) achieved its reverse guidance for 2024, with both top-line and profitability meeting expectations.
• The Bioprocess Solutions division saw a slight sales increase, driven by strong growth in the consumables business.
• Order intake for the group was double digits ahead of the prior year, indicating strong demand recovery.
• The company successfully implemented an efficiency program, saving over EUR 100 million and maintaining a robust EBITDA margin.
• Sartorius AG (SARTF) expects to outperform the market with moderate profitable growth in 2025, driven by fundamental growth drivers in the biopharma industry.

Negative Points

• Sales for the Lab Products & Services (LPS) division were slightly below the previous year's level, impacted by a soft market in China.
• The equipment business remained muted, with negative double-digit growth in 2024.
• Profitability was slightly below 2023 levels due to lower capacity utilization and inventory reduction efforts.
• The company remains cautious about the market outlook for 2025, expecting growth below midterm average rates.
• The financial results were impacted by increased depreciation and higher financial expenditures, leading to a lower underlying net profit compared to the prior year.

Q & A Highlights

Q: How did consumable orders develop in Q4, and do they reflect any catch-up from low inventory levels? A: Joachim Kreuzburg, CEO: The book-to-bill ratio for bioprocessing was close to 1.2 in Q4, with consumables above that. We don't have indications that customers ran their inventory levels too low, so we don't expect volatility from catch-up orders. Order levels were low in previous quarters, picking up slightly in Q3, and the year-on-year order growth has been encouraging.

Q: Can you provide insights into the typical seasonality of orders and the status of your South Korea expansion? A: Joachim Kreuzburg, CEO: Seasonality is difficult to pinpoint as there has always been some fluctuation. Q4 might be slightly stronger on average, but it's not a clear pattern. Regarding South Korea, we are on track with our facility in Songdo, expecting to start qualification in 2026, which will enhance our capacity in the region.

Q: Why wouldn't a 12.7% order intake increase translate to double-digit sales growth in 2025 for bioprocessing? A: Joachim Kreuzburg, CEO: While the order intake growth is healthy, we should consider the low order levels in 2023. We maintain a cautious outlook and do not recommend speculating on double-digit growth rates at this point.

Q: What are the potential drivers of upside and downside to the 2025 sales guidance? A: Joachim Kreuzburg, CEO: Upside and downside variables include the timing of customer projects, approvals, and manufacturing campaigns. The destocking impact should be minimal, but the biotech funding environment and China's market conditions could introduce some uncertainty.

Q: Can you confirm the mix of equipment versus consumables and its impact on future growth? A: Rene Faber, Head of Bioprocess Solutions Division: Currently, the mix is about 75% consumables and 25% equipment. We are moving towards a higher recurring revenue portion, potentially reaching 80-20. Equipment sales are important as they often lead to consumable sales.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.