Interim Report January - June 2000
- Orders received totalled SEK
2,518.7 million (2,447.5)
- Net sales totalled SEK
2,419.5 million (2,381.0)
- The operating profit was SEK
301.3 million (341.7)
- The profit before tax was SEK
260.7 million (316.7)
- The acquisitions of
Techno-Médic in Canada and
Lenken in Ireland underpin Getinge’s world leading
position
Comments on the quarter
and outlook
The Infection Control business area continues to progress well in
North America and in the developing markets, though profitability
is not at a satisfactory level. The markets for life science
products continue to perform well, while customers within the
pharmaceutical industry are requesting fewer products, a
situation that experience tells us affects the market during a
period of major mergers between pharmaceutical companies. The
business area’s results are somewhat higher than last
year’s.
The Geriatrics business area has a
shorter business cycle and demand continues to be difficult to
predict. The lower demand from the health care market in the UK,
which was felt in Q1, has remained during Q2. As the business
area’s gross margins are generally high, the business is
volume-sensitive. The pressure sore sector where the gross
margins are highest, is the area mainly hit and will not be able
to meet expectations. The business area has reason to believe
that there is light at the end of the tunnel. The uncertainty
that characterised geriatric care activities in the US over the
past 18 months as changes to the Medicare system took effect, is
now diminishing. Even if it is difficult to see the effects of
the promised state aid to the geriatric care sector, customers in
this sector have adapted themselves to the new rules. In
comparison with last year, 1999’s figures for the first six
months included a significant one-off order from Beverly
Enterprises of the US of around SEK 80 million. This order was
concluded during Q2 1999 and will not affect comparisons in Q3
and Q4.
We still expect improved results
in the Infection Control business area this year. The Geriatrics
business area has had a weak introduction to the year on the US
market, and continued flat demand for pressure sore products in
the UK will mean that the business area will not meet last
year’s profit levels.
Infection Control business
area
Market developments
| |
2000
|
1999
|
Change
|
2000
|
1999
|
Change
|
| Orders
received per market |
Q2
|
Q2
|
|
H1
|
H1
|
|
| Western
Europe |
329,2
|
356,5
|
-7,7%
|
652,7
|
677,6
|
-3,7%
|
| USA and
Canada |
314,7
|
285,2
|
10,3%
|
612,5
|
558,6
|
9,6%
|
| Asia/Australia |
61,7
|
56,4
|
9,4%
|
122,4
|
99,6
|
22,9%
|
| Rest of the
world |
54,5
|
17,9
|
204,5%
|
108,5
|
43,0
|
152,3%
|
| Business
area total |
760,1
|
716,0
|
6,2%
|
1.496,1
|
1.378,8
|
8,5%
|
| adjusted
for currency flucs.& corp.acqs |
|
3,0%
|
|
|
6,5%
|
Demand for the business
area’s products continued to be generally good during Q2.
The number of enquiries in Western Europe remained at a
satisfactory level although fewer orders have been completed
during the quarter. A number of Western European markets have
performed well, such as Sweden, France and the UK. However,
orders received in Germany have been unsatisfactory.
The North American market
continued to progress well during Q2. Activity levels have been
high especially for customers in the life science sector. After
the period’s end the business area has received a number of
important orders in this customer segment.
The developing markets, with Asia
and Latin America at the forefront, maintained good growth in Q2.
| Results |
2000 |
1999 |
Change |
2000 |
1999 |
Change |
1999 |
| |
Q2 |
Q2 |
|
H1 |
H1 |
|
FY |
| Net sales,
SEK Million |
757,4 |
676,6 |
11,9% |
1.409,9 |
1.295,9 |
8,8% |
2.811,1 |
| adjusted
for currency flucs.& corp.acqs |
|
9,0% |
|
|
6,9% |
|
| Gross profit |
271,2 |
267,0 |
1,6% |
522,7 |
504,3 |
3,6% |
1.084,6 |
| Gross
margin % |
35,8% |
39,5% |
-3,7% |
37,1% |
38,9% |
-1,8% |
38,6% |
| Operating
cost, SEK Million |
-182,7 |
-180,8 |
1,1% |
-365,4 |
-350,2 |
4,3% |
-719,3 |
| Operating
profit |
88,5 |
86,2 |
2,7% |
157,3 |
154,1 |
2,1% |
365,4 |
| Operating
margin % |
11,7% |
12,7% |
-1,0% |
11,2% |
11,9% |
-0,7% |
13,0% |
The business area reported a
smaller improvement in results. The lower gross margin during the
quarter is due to sales in North America, where the gross margin
is on average lower, making up a larger share of the total. In
addition, a number of reference installations for the automatic
handling of goods for life science centres were delivered during
the quarter and had a negative impact on gross margins. Increased
costs in the business have been moderate.
Important activities
Work on a new generation of health care sterilizers, to be
launched in the late autumn, is continuing according to plan.
Since its inception, the project’s costs have been SEK 8.0
million and in total it is estimated that costs will reach around
SEK 20 million. The project, when realised, is expected to
generate savings of around SEK 50-60 million per year from 2002.
During Q2 the business area
completed and installed a system for the automated handling of
goods in the life science sector . The system has been well
received by the customers in this sector. During Q2 the business
area in France also acted as system supplier in the start-up of a
sterilization centre. This is a part of an ongoing evaluation of
further integration in the customer chain.
T-Doc, the Group’s IT-based
system for monitoring and documenting sterile processors, added
one new product during Q2 — T-Doc Label & Lot. The
product is a smaller system for a PC environment mainly aimed at
small sterilization centres. The launch of T-Doc on new markets
has been received very well.
Outlook
Market conditions for the business area continue to be positive.
The order book is looking healthy compared to this time last
year. Taken as a whole we estimate the year’s operating
profit will exceed last year’s.
Geriatrics business area
Market developments
| |
2000 |
1999 |
Change |
2000 |
1999 |
Change |
| Orders
received per market |
Q2 |
Q2 |
|
H1 |
H1 |
|
| USA and
Canada |
187,4 |
177,0 |
5,9% |
368,7 |
406,9 |
-9,4% |
| Great
Britain |
104,8 |
104,3 |
0,4% |
260,5 |
269,9 |
-3,5% |
| Germany |
58,2 |
61,2 |
-4,9% |
118,1 |
118,6 |
-0,4% |
| Other
Western Europe |
107,6 |
98,1 |
9,7% |
211,9 |
200,2 |
5,8% |
| Rest of the
world |
20,8 |
24,8 |
-16,1% |
33,8 |
40,9 |
-17,4% |
| Business
area total |
478,8 |
465,4 |
2,9% |
993,0 |
1.036,5 |
-4,2% |
| adjusted
for currency flucs.& corp.acqs |
|
0,6% |
|
|
-6,4% |
Demand stabilised during Q2 except
for the pressure sore business in the UK. Systematic and
consistent focusing on the US market led to growth for the
quarter progressing well. Developments within the Hygiene system
and Patient Handling product lines on the UK market have been
good and market share has strengthened. The pressure sore
business in the UK continued to record weak volumes during Q2.
Demand on the German market for
Hygiene Systems’ and Patient Handling’s products has
risen while volumes in the pressure sore business have fallen.
Markets in southern Europe and the Benelux countries have
continued to perform well over the period..
| Results |
2000 |
1999 |
Change |
2000 |
1999 |
Change |
1999 |
| |
Q2 |
Q2 |
|
H1 |
H1 |
|
FY |
| Net sales,
SEK Million |
480,5 |
505,0 |
-4,9% |
978,7 |
1.052,0 |
-7,0% |
2.007,7 |
| adjusted
for currency flucs.& corp.acqs |
|
-7,3% |
|
|
-9,3% |
|
| Gross profit |
230,5 |
265,0 |
-13,0% |
487,0 |
560,7 |
-13,1% |
1.051,6 |
| Gross
margin % |
48,0% |
52,5% |
-4,5% |
49,8% |
53,3% |
-3,5% |
52,4% |
| Operating
cost, SEK Million |
-170,8 |
-188,6 |
-9,4% |
-346,3 |
-376,5 |
-8,0% |
-731,2 |
| Operating
profit |
59,7 |
76,4 |
-21,9% |
140,7 |
184,2 |
-23,6% |
320,4 |
| Operating
margin % |
12,4% |
15,1% |
-2,7% |
14,4% |
17,5% |
-3,1% |
16,0% |
The decline in profits for the
quarter is mainly due to the lower volumes in the pressure sore
business, which, linked with a reduction in large-scale
production for the Patient Handling product line, explains the
gross margin’s decline. The Hygiene Systems product
line’s gross margin is continuing to progress well. The
lower cost levels are a result of the cost rationalisation
program carried out in the US and at the pressure sore business
in the UK.
Important activities
During Q2 the business area carried out two important
acquisitions; Gestion Techno-Médic in Canada and Lenken
Healthcare Ltd in Ireland.
Techno-Médic’s main product
is a unique ceiling-mounted hoist. Coupled with Arjo’s sales
organisation the products will contribute to a global expansion
in the ceiling-mounted hoist sector. It is calculated that the
new product range will be launched in the Group’s sales
organisation at the beginning of next year. The acquisition will
have a positive impact on the Group’s profit from 2001.
Lenken has been the Group’s
distributor for over 20 years in Ireland. The company is the
leading supplier of products for geriatric care and care of the
disabled. Through this acquisition the Group aims to increase its
sales and market share in Ireland. The acquisition will have a
positive impact on the Group’s profit from 2001.
Production of a new series of
lifts for institutional use has advanced according to plan and
the launch is expected to be at the beginning of next year.
Outlook
After Q2 the business area has made a more positive assessment of
developments on the North American markets.
The business area expects to see
stable demand on the UK market for lifting aids during the
remainder of the year. The pressure sore business, which
unaltered constitutes one of the Group’s strategic growth
areas, will focus on improvements and cost control. However
demand within the Antidecubitus product line will also not match
last year’s results in the second half of the year.
Taking into consideration the
pressure sore business in the UK, coupled with the flat start to
the year, the business area’s results are expected to be
lower than last year’s.
Medical
The independent Medical product line that includes the companies
LIC Audio and NeuroMédica reported invoiced sales of SEK 30.8
million (33.1 m). The operating profit was SEK 3.3 million (3.3
m).
Surplus funds from SPP
SEK 38.9 million of SPP’s surplus funds is available for
future allocation in the Group and has not been taken up as
revenue.
Next report
The next report from the Getinge Group (Q3) will be published on
19 October 2000.
Getinge 10 August 2000
Johan Malmquist
President and CEO Tel.no. +46 (0) 3515 55 00
| The
Group: Income Statements |
2000 |
1999 |
Change |
2000 |
1999 |
Change |
1999 |
| SEK
Million |
Q2 |
Q2 |
|
H1 |
H1 |
|
FY |
| Net sales
1) |
1.251,6 |
1.197,9 |
4,5% |
2.419,5 |
2.381,0 |
1,6% |
4.884,7 |
| Cost of
goods sold 2) |
-745,7 |
-660,7 |
12,9% |
-1.400,2 |
-1.305,2 |
7,3% |
-2.727,0 |
| Gross
profit |
505,9 |
537,2 |
-5,8% |
1.019,3 |
1.075,8 |
-5,3% |
2.157,7 |
| Gross
margin |
40,4% |
44,8% |
-4,4% |
42,1% |
45,2% |
-3,1% |
44,2% |
| Operating
cost 2) |
-356,6 |
-372,9 |
-4,4% |
-718,0 |
-734,1 |
-2,2% |
-1.465,5 |
| Operating
profit 3) |
149,3 |
164,3 |
-9,1% |
301,3 |
341,7 |
-11,8% |
692,2 |
| Operating
margin |
11,9% |
13,7% |
-1,8% |
12,5% |
14,4% |
-1,9% |
14,2% |
| Interest
income |
4,0 |
12,5 |
|
8,4 |
17,1 |
|
25,9 |
| Interest
expense |
-25,1 |
-19,8 |
|
-47,5 |
-39,9 |
|
-77,6 |
| Other
financial items |
-3,1 |
-1,1 |
|
-1,5 |
-1,6 |
|
-3,3 |
| Ass.companies'
profit/loss |
0,0 |
-0,3 |
|
0,0 |
-0,6 |
|
-1,0 |
| Profit
before tax |
125,1 |
155,6 |
-19,6% |
260,7 |
316,7 |
-17,7% |
636,2 |
| Tax 4) |
-31,3 |
-39,0 |
|
-65,2 |
-79,2 |
|
-158,5 |
| Net
profit |
93,8 |
116,6 |
-19,6% |
195,5 |
237,5 |
-17,7% |
477,7 |
| |
|
|
|
|
|
|
|
| 1)
Adjusted for currency fluctuations and company
acquisitions |
|
|
|
|
| the net
sales' change is |
|
|
1,9% |
|
|
-0,4% |
|
| 2)
Due to the reclassification of certain costs, some minor
transfers |
|
|
|
|
|
| have
been made in the comparison from operating cost to cost
of goods sold. |
|
|
|
|
| 3)
Operating profit is charged with |
|
|
|
|
|
|
|
| —
amortisation on goodwill |
-16,0 |
-15,8 |
|
-31,1 |
-30,5 |
|
-60,7 |
| —
depr. on other fixed assets |
-29,6 |
-35,1 |
|
-62,0 |
-66,4 |
|
-127,5 |
| |
-45,6 |
-50,9 |
|
-93,1 |
-96,9 |
|
-188,2 |
| 4)
For fiscal 2000, tax is estimated at 25% of the profit
before tax. For 1999 the Group's full tax cost was 24.9%
of the profit before tax. |
| |
|
|
|
|
|
|
|
| Quarterly
results |
1998 |
1998 |
1998 |
1999 |
1999 |
1999 |
1999 |
2000 |
2000 |
| SEK
Million |
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
| Net sales |
1.001,9 |
978,3 |
1.427,6 |
1.183,1 |
1.197,9 |
1.074,8 |
1.428,9 |
1.167,9 |
1.251,6 |
| Cost of
goods sold |
-537,1 |
-542,2 |
-807,2 |
-644,5 |
-660,7 |
-622,2 |
-799,4 |
-654,5 |
-745,7 |
| Gross profit |
464,8 |
436,1 |
620,4 |
538,6 |
537,2 |
452,6 |
629,5 |
513,4 |
505,9 |
| Operating
cost |
-303,8 |
-314,5 |
-401,5 |
-361,2 |
-372,9 |
-342,7 |
-388,9 |
-361,4 |
-356,6 |
| Operations
divested |
3,4 |
|
|
|
|
|
|
|
|
| Operating
profit |
164,4 |
121,6 |
218,9 |
177,4 |
164,3 |
109,9 |
240,6 |
152,0 |
149,3 |
| Financial
net |
-16,2 |
-17,4 |
-18,5 |
-16,0 |
-8,4 |
-17,8 |
-12,8 |
-16,4 |
-24,2 |
| Ass.comp.s'
profit/loss |
-0,3 |
-0,1 |
-0,5 |
-0,3 |
-0,3 |
-0,3 |
-0,1 |
0,0 |
0,0 |
| Profit
before tax |
147,9 |
104,1 |
199,9 |
161,1 |
155,6 |
91,8 |
227,7 |
135,6 |
125,1 |
| Tax |
-30,8 |
-22,6 |
-40,7 |
-40,2 |
-39,0 |
-23,0 |
-56,3 |
-33,9 |
-31,3 |
| Net profit |
117,1 |
81,5 |
159,2 |
120,9 |
116,6 |
68,8 |
171,4 |
101,7 |
93,8 |
| The
Group: Balance Sheets |
|
|
|
| Assets
SEKMillion |
30 June 2000 |
30 June 1999 |
31 Dec 1999 |
| Goodwill |
1.002,7 |
1.027,8 |
1.012,7 |
| Fixed assets |
881,1 |
728,8 |
815,6 |
| Stock-in-trade |
891,8 |
826,5 |
765,3 |
| Receivables |
1.625,4 |
1.578,4 |
1.625,1 |
| Liquid
assets |
225,9 |
221,3 |
158,8 |
| |
|
|
|
| Total
assets |
4.626,9 |
4.382,8 |
4.377,5 |
| |
|
|
|
| Shareholders'
equity & Liabilities |
|
|
|
| Shareholders'
equity |
1.604,5 |
1.320,2 |
1.560,8 |
| Interest
bearing liabilities |
2.017,3 |
1.894,9 |
1.673,7 |
| Non-interest
bearing liabilities |
1.005,1 |
1.167,7 |
1.143,0 |
| |
|
|
|
| Total
Equity & Liabilities |
4.626,9 |
4.382,8 |
4.377,5 |
| The
Group: Cash flow |
2000 |
1999 |
2000 |
1999 |
1999 |
| SEK
Million |
Q2 |
Q2 |
H1 |
H1 |
FY |
| Operations |
|
|
|
|
|
| Operating
profit |
149,3 |
164,3 |
301,3 |
341,7 |
692,2 |
| Depreciation |
45,6 |
50,9 |
93,1 |
96,9 |
188,2 |
| Financial
items |
-24,2 |
-8,4 |
-40,6 |
-24,4 |
-55,0 |
| Share in
ass. companies' profit/loss |
0,0 |
-0,3 |
0,0 |
-0,6 |
-1,0 |
| Taxes paid |
-27,7 |
-14,0 |
-57,7 |
-51,2 |
-100,3 |
| Cash flow
before changes in |
|
|
|
|
|
| working
capital |
143,0 |
192,5 |
296,1 |
362,4 |
724,1 |
| Changes
in working capital |
|
|
|
|
|
| Stock-in-trade |
-23,8 |
11,0 |
-126,1 |
-55,8 |
7,8 |
| Rental
equipment |
-3,6 |
-17,0 |
-7,9 |
-9,0 |
-15,7 |
| Current
receivables |
-79,5 |
-10,5 |
0,2 |
127,3 |
40,7 |
| Current
operating liabilities |
-62,0 |
-36,6 |
-107,9 |
-75,7 |
-33,6 |
| Restructuring
reserves, utilised |
-17,0 |
-30,2 |
-32,5 |
-39,9 |
-118,8 |
| Cash flow
before investments |
-42,9 |
109,2 |
21,9 |
309,3 |
604,5 |
| Direct net
investments in machinery, |
|
|
|
|
|
| equipment
and buildings |
-38,5 |
-30,1 |
-60,9 |
-81,6 |
-167,4 |
| Operating
cash flow |
-81,4 |
79,1 |
-39,0 |
227,7 |
437,1 |
| Net impact
of company acquisitions and |
|
|
|
|
|
| disposal of
operations |
-10,0 |
0,4 |
-15,6 |
-18,3 |
-35,4 |
| Change in
long-term receivables |
-55,7 |
0,1 |
-57,4 |
1,1 |
15,8 |
| Change in
deferred tax |
1,9 |
-3,3 |
-7,3 |
-7,5 |
-43,2 |
| Dividend
paid |
-159,0 |
-147,6 |
-159,0 |
-147,6 |
-147,6 |
| Translation
differences |
5,7 |
17,4 |
1,8 |
-6,6 |
-19,2 |
| Decrease
+/Increase - in net debt |
-298,5 |
-53,9 |
-276,5 |
48,8 |
207,5 |
| Orders
received |
2000 |
1999 |
Change |
Adj f acq's |
2000 |
1999 |
Change |
Adj f acq's |
1999 |
| per
product line |
Q2 |
Q2 |
|
& curr.fluct's |
H1 |
H1 |
|
& curr.fluct's |
FY |
| Sterilization |
514,7 |
494,3 |
4,1% |
-0,2% |
1.039,2 |
937,6 |
10,8% |
7,7% |
1.942,6 |
| Disinfection |
245,4 |
221,7 |
10,7% |
10,2% |
456,8 |
441,2 |
3,5% |
3,9% |
941,9 |
| Hygiene
Systems |
208,7 |
190,7 |
9,4% |
8,8% |
416,7 |
393,7 |
5,8% |
5,2% |
790,3 |
| Patient
Handling |
174,7 |
160,3 |
9,0% |
7,2% |
365,9 |
401,0 |
-8,8% |
-10,6% |
745,1 |
| Antidecubitus |
95,5 |
114,2 |
-16,4% |
-22,5% |
210,3 |
241,6 |
-13,0% |
-18,3% |
446,2 |
| Medical |
13,3 |
15,7 |
-15,3% |
-15,3% |
29,7 |
32,2 |
-7,8% |
-7,8% |
66,1 |
| |
1.252,3 |
1.196,9 |
4,6% |
1,9% |
2.518,7 |
2.447,5 |
2,9% |
0,8% |
4.932,2 |
| |
|
|
|
|
|
|
|
|
|
| Net
sales |
2000 |
1999 |
Change |
Adj f acq's |
2000 |
1999 |
Change |
Adj f acq's |
1999 |
| per
product line |
Q 2 |
Q 2 |
|
& curr.fluct's |
HY 1 |
HY 1 |
|
& curr.fluct's |
FY |
| Sterilization |
522,3 |
463,4 |
12,7% |
8,8% |
960,8 |
881,6 |
9,0% |
6,2% |
1.902,7 |
| Disinfection |
235,1 |
213,2 |
10,3% |
9,4% |
449,1 |
414,2 |
8,4% |
8,3% |
908,4 |
| Hygiene
Systems |
212,2 |
208,0 |
2,0% |
0,9% |
400,9 |
404,6 |
-0,9% |
-1,9% |
814,4 |
| Patient
Handling |
169,6 |
187,2 |
-9,4% |
-10,8% |
363,4 |
412,0 |
-11,8% |
-13,7% |
749,1 |
| Antidecubitus |
98,8 |
110,0 |
-10,2% |
-16,8% |
214,5 |
235,4 |
-8,9% |
-14,4% |
444,2 |
| Medical |
13,6 |
16,1 |
-15,5% |
-15,5% |
30,8 |
33,1 |
-6,9% |
-6,9% |
65,9 |
| |
1.251,6 |
1.197,9 |
4,5% |
1,9% |
2.419,5 |
2.381,0 |
1,6% |
-0,4% |
4.884,7 |
| Key
figures |
2000 H1 |
1999 H1 |
Change |
1999 |
| Orders
received, SEK Million |
2.518,7 |
2.447,5 |
2,9% |
4.932,2 |
| adjusted
for currency flucs.& corp.acqs |
|
|
0,8% |
|
| Net
sales, SEK Million |
2.419,5 |
2.381,0 |
1,6% |
4.884,7 |
| adjusted
for currency flucs.& corp.acqs |
|
|
-0,4% |
|
| Financial
net |
-40,6 |
-24,4 |
66,4% |
-55,0 |
| Profit
before tax, SEK Million |
260,7 |
316,7 |
-17,7% |
636,2 |
| Net
profit, SEK Million |
195,5 |
237,5 |
-17,6% |
477,7 |
| Earnings
per share after full tax, SEK |
4,30 |
5,23 |
-17,6% |
10,52 |
| Capital
employed, SEK Million |
3.118,2 |
2.782,7 |
12,2% |
2.988,2 |
| Return
on capital employed, per cent |
20,9% |
24,5% |
-3,6% |
23,2% |
| Net
debt/equtiy ratio, multiple |
1,12 |
1,27 |
-0,15 |
0,97 |
| Equity/assets
ratio, per cent |
34,7% |
30,1% |
4,6% |
35,7% |
| Equity
per share, SEK |
35,32 |
29,07 |
21,5% |
34,36 |
| Cash
flow before investments, SEK Million |
21,9 |
309,3 |
|
604,5 |
| Net
investments in fixed assets, SEK Million |
60,9 |
81,6 |
|
167,4 |
| Number
of employees at the period's end |
3.770 |
3.766 |
|
3.812 |
This report has not been subject
to an official audit.
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