Regulatory News:
Eurofins Scientific (Paris:ERF):
- Strong growth of revenues, resulting in a record six month
period with EUR 3,272m revenues in H1 2021 up 41% vs. H1 2020,
thanks to strong growth of Eurofins’ Core Business (excluding
COVID-19 related clinical testing and reagent revenues) and
sustained revenues from COVID-19 testing and reagents (close to EUR
750m).
- The Core Business delivered strong organic growth13 in H1 2021
(17% year-on-year) despite some of Eurofins’ businesses remaining
affected by lockdowns during H1 2021.
- Just looking at H1 2021 vs. H1 2020 however, which is an easy
comparable, affected by temporary lockdowns, does not give the best
picture of long-term organic growth and business recovery. We thus
provide comparison with the pre-pandemic period of H1 2019 as an
additional data point. Core Business organic growth was 16% in H1
2021 vs. H1 2019, and close to 13% vs. H1 2019 corrected for the
EUR 62m estimated missing revenues from the cyber-attack of 2 June
2019.
- With organic revenues 13% above H1 2019 in H1 2021, Eurofins’
Core Business is once again leading the TIC industry in terms of
organic growth. Since the last pre-pandemic comparable period (H1
2019) the Core Business has delivered a CAGR of over 6% compared
with an average of about 0.5% for the three historic TIC leaders.
Eurofins has done a very modest level of acquisitions in 2019, 2020
and H1 2021 and this again confirms that acquisitions do not boost
organic growth. In fact, integration efforts rather reduce organic
growth.
- The strong growth of the Core Business in the first half of
2021 comes in part from a faster recovery than expected. At the
time of FY 2020 results publication, we estimated that EUR 250m
revenues had been lost in FY 2020 due to the impact of COVID-19
lockdowns and travel restrictions and the objective was to recover
these revenues by 2022. It appears that these revenues have been
largely recovered now, earlier than forecast, and were complemented
by further organic growth of more than 5%.
- In Q2 2021, Eurofins’ Core Business achieved organic growth of
25% (19% vs. Q2 2019, and close to 13% vs. Q2 2019 corrected for
the EUR 62m estimated missing revenues from the cyber-attack of
June 2019), confirming the recovery and fast organic growth of the
Core Business, which is tracking well above the Group’s 5% annual
objective since 2019 in spite of some remaining drag from the
pandemic.
- Total revenues including COVID-19 testing and reagents grew 41%
in H1 2021 and 43% organically, well above initial
expectations.
- Record adjusted1 EBITDA3 of EUR 1,008m in H1 2021 (+104%
year-on-year), representing a 30.8% adjusted EBITDA margin.
- Strong cash flow generation, with Free Cash Flow to the Firm10
of EUR 489m (+55% year-on-year), which, coupled with controlled
capital expenditure, enabled the Group to further lower its
leverage to 1.0x (net debt/last 12 months proforma adjusted EBITDA)
despite significant one-off bond repurchase costs in H1 2021.
- Refinancing exercises carried out in H1 2021 enabled the Group
to secure a EUR 750m 10-year bond with a coupon below 1% and will
bring the average cost of financing below 1.8% from the second half
of 2021 onwards as the Group fully repaid in May and June 2021 its
2022 and 2023 Eurobonds and successfully purchased a significant
portion of its 2024 and 2026 Eurobonds which were bearing much
higher interest rates.
- Second investment grade credit rating from Fitch Ratings after
the one secured with Moody’s last year.
- Reported basic earnings per share (EPS)8 increased by 317% to a
record EUR 2.17 in H1 2021 compared to EUR 0.52 in H1 2020.
- The growth in the Core Business was broad based and across
business lines. Notable product launches and innovation included:
- Highly innovative rapid testing methods including for the
identification of sugars and the organic certification of
products;
- New proprietary advanced testing methods to expand Clinical
Diagnostics’ services for transplant patients;
- Differentiated services / technologies in Environment Testing
including a new automated and robotised PFAS testing method
supporting the lowest detection limits globally;
- TruGraf® approved with Humana for in-network coverage of
Medicare kidney transplant patients effective August 1, 2021.
- Continued commitment and innovation to fight the COVID-19
pandemic:
- Over 25 million COVID-19 PCR tests completed since the start of
the pandemic;
- Over 125,000 SARS-CoV-2 samples sequenced from 23 countries
since our press release on 28 December 2020;
- Broad network of over 1,000 testing centres developed in Europe
to facilitate summer travelling through SAFER@WORK™.
- Eurofins has made further progress in H1 towards the completion
of its infrastructure and operational excellence programmes.
- Outlook: As outlined previously,
the Group’s 2021 objectives set on March 1, 2021 were likely to be
significantly exceeded. The uncertainties surrounding new variants
and public health responses still make precise predictions
impossible, but if Eurofins were to generate only EUR 1 billion
revenues from COVID-19 testing and reagents in FY 2021 (so only EUR
250 million in H2) and 5% organic growth in H2 2021 for its Core
Business, the annual revenues for FY 2021 would exceed EUR 6,150m.
This can be taken as an upgraded revenue objective for FY 2021. On
this basis adjusted EBITDA would likely exceed EUR 1,700m in FY
2021. Eurofins thus now upgrades FY 2021 objectives for revenues by
13% to EUR 6,150m and for adjusted EBITDA by 36% to EUR 1,700m all
at average H1 2021 exchange rates. Should COVID-19 testing continue
at high levels in Q4 2021, this could once again be significantly
exceeded.
- Objectives for FY 2022 remain unchanged and exclude any
COVID-19 related testing revenues or potential ongoing disruptions
from the pandemic: FY 2022 revenue objective remains at EUR 5,450m
excluding acquisitions in both 2021 and 2022, and EUR 5,700m
including potential proforma revenues from acquisitions of EUR 150m
in 2021 and EUR 200m in 2022 (consolidated for 6 months) all at
average 2020 exchange rates. In reality, COVID-19 and associated
testing may unfortunately continue at a meaningful level in 2022.
However, it is still impossible to quantify at this stage due to
the uncertainty about new variants which may emerge and public
policy responses. Eurofins continues to carry out very significant
COVID-19 testing numbers each day at the moment and significant
COVID-19 related testing may be required through 2021 or much
longer.
- Objectives for FY 2023 also remain unchanged and do not include
any COVID-19 impact either. The revenue objective for FY 2023 is
EUR 5,725m excluding acquisitions in 2021, 2022 and 2023, and EUR
6,175m including potential proforma revenues from acquisitions of
EUR 150m in 2021, EUR 200m in 2022 and EUR 200m in 2023
(consolidated for 6 months) all at average 2020 exchange
rates.
- Objectives for adjusted EBITDA and Free Cash Flow to the Firm
for FY 2022 and FY 2023 also remain unchanged.
- Eurofins is on track to add EUR 150m annualised proforma
revenues from acquisitions in 2021.
Comments from the CEO, Dr. Gilles Martin:
“I am delighted to see
Eurofins deliver a record set of financial results for the first
six months of 2021. Our Core Business has continued to perform very
well with strong growth across business lines and geographies.
Alongside the Core Business, we remain agile and innovative,
developing new solutions to fight the pandemic. Business outlook
remains very strong in almost all our areas of activity. Eurofins’
focus on Testing for Life and investing for over 10 years to build
a leading global position and unmatched state-of-the-art laboratory
network is providing a solid foundation for strong profitable
growth in the post pandemic times. It increasingly appears that the
evolutions resulting from the pandemic will drive increasing demand
for Eurofins’ services for many years to come. Eurofins intends to
continue growing its market share, improving utilisation of its
laboratories and aiming for a gradual improvement of the
profitability margins of its Core Business, while being ready to
respond very quickly to any new public health crisis.
Going forward Eurofins intends
to continue to invest significantly to be the most digital and
innovative member of its industry and participate meaningfully in
the new markets opened by the many recent genomic, proteomic, and
life sciences scientific breakthroughs.”
Business Review
The following figures are extracts from the Condensed Interim
Consolidated Financial Statements and should be read in conjunction
with the Condensed Interim Consolidated Financial Statements and
Notes for the period ended 30 June 2021. The First Half Year 2021
Report can be found on Eurofins’ website at the following location:
https://www.eurofins.com/investors/reports-and-presentations/
Table 1: Half Year 2021 Results Summary
H1 2021
H1 2020
+/- %
Adj.
Results
+/- %
Rep.
Results
In EUR m except otherwise stated
Adjusted1
Results
Separately
disclosed
items2
Reported
Results
Adjusted1
Results
Separately
disclosed
items2
Reported
Results
Revenues
3,272
-
3,272
2,323
-
2,323
41%
41%
EBITDA3
1,008
-19
989
493
-35
459
104%
116%
EBITDA Margin (%)
30.8%
30.2%
21.2%
19.7%
+960bps
+1,050bps
EBITAS4
813
-29
785
311
-52
259
162%
203%
Net profit7
582
-167
415
187
-92
95
211%
339%
Basic EPS (EUR)8
3.05
-0.87
2.17
1.03
-0.51
0.52
196%
317%
Net cash provided by operating
activities
709
445
59%
Free cash Flow to the Firm10
489
315
55%
Net capex9
220
130
69%
Net Debt11
2,015
2,584
-22%
Leverage (net debt/last 12 months proforma
adjusted EBITDA)
1.0x
2.5x
-1.5x
Note: Definitions of the alternative performance measures used
can be found at the end of this press release
Revenues
Revenues grew by 41% from EUR 2,323m to EUR 3,272m in H1 2021.
The Group’s Core Business (excluding COVID-19 related clinical
testing and reagent revenues) delivered 17% organic growth in H1
2021 (16% vs. H1 2019, and close to 13% vs. H1 2019 corrected for
the EUR 62m estimated missing revenues from the cyber-attack impact
of June 2019) and 25% in Q2 2021 (19% vs. Q2 2019, and close to 13%
vs. Q2 2019 corrected for the EUR 62m estimated missing revenues
from the cyber-attack impact of June 2019). Revenues from COVID-19
related testing and reagents were close to EUR 750m in H1 2021. In
H1 2021, total organic growth was 43%.
The strong growth of the Core Business in the first half of 2021
comes in part from a faster recovery than expected. At the time of
FY 2020 results publication, an estimated EUR 250m revenues had
been lost in FY 2020 due to the impact of COVID-19 lockdowns and
travel restrictions. These revenues have been largely recovered
now, earlier than forecast, and were complemented by further
organic growth of more than 5%.
Table 2: Organic Growth Calculation and Revenue
Reconciliation
In EUR m except otherwise
stated
H1 2020 reported revenues
2,323
+ H1 2020 acquisitions - revenue part not
consolidated in H1 2020 at H1 2020 FX rates
44
- H1 2020 revenues of discontinued
activities / disposals15
-5
= H1 2020 pro-forma revenues (at H1 2020
FX rates)
2,362
- H1 2021 FX impact on H1 2020 pro-forma
revenues
-78
= H1 2020 pro-forma revenues (at H1
2021 FX rates) (a)
2,284
H1 2021 organic scope* revenues (at H1
2021 FX rates) (b)
3,261
H1 2021 organic growth rate
(b/a-1)
43%
H1 2021 acquisitions - revenue part
consolidated in H1 2021 at H1 2021 FX rates
11
H1 2021 revenues of discontinued
activities / disposals15
0
H1 2021 reported revenues
3,272
* Organic scope consists of all companies that were part of the
Group as at 01/01/2021. This corresponds to 2020 pro-forma
scope.
Table 3: Breakdown of Revenue by Operating Segment
In EUR m except otherwise stated
H1 2021
As % of
total
H1 2020
As % of
total
Growth %
Europe
2,005
61%
1,276
55%
57%
North America
1,008
31%
859
37%
17%
Rest of the World
259
8%
188
8%
38%
Total
3,272
100%
2,323
100%
41%
Europe
In Europe, revenues increased 57% to EUR 2,005m compared to EUR
1,276m in H1 2020. Europe now accounts for c. 61% of Group
revenues, in part due to a greater proportion of COVID-19 related
revenues generated in Europe.
Food Testing in Europe had a strong performance in the first
half of the year. More stringent regulations across many
geographies and new testing methods developed and launched by
Eurofins are increasing demand for the Group’s Food Testing
services. In the UK, all pre-packed foods for direct sale will
require allergen labelling as of October 2021 which will likely
increase demand for allergen testing. In the Netherlands, Eurofins
developed and launched a new rapid testing method for the
identification of sugars in food and feed products. It has been
approved by the International Organization for Standardization
(ISO), the European Committee for Standardization (CEN) and the
International Dairy Federation (IDF) as the official method for
testing milk and milk products including infant formulae, and
conforms to the AOAC 2018.001 standards. In France, INAO (Institut
National des Appellations d’Origine) has granted Eurofins Hygiène
Alimentaire with the status of Organic Certification Body,
expanding its services to assist companies with the organic
certification of their products.
The Environment Testing business experienced very strong volumes
across most geographies in Europe, with continued market share
gains. More stringent regulations are increasing demand for
Environment Testing services, especially around per- and
polyfluoroalkyl substances (PFAS), soil protection and asbestos.
Demand for PFAS testing is increasing across many geographies. In
Sweden, Eurofins developed a new automated and robotised PFAS
testing method supporting the lowest detection limits globally.
This new testing method will be rolled-out to other Environment and
Food Testing laboratories across Eurofins’ global network. In
Germany, regulations around handling mineral substitute building
materials, soil protection and contaminated sites testing are being
strengthened. In France, the regulations around asbestos testing
became stricter with a new decree enforced as of April 2021.
Eurofins Analyses pour le Bâtiment Sud-Ouest was the first
laboratory in France to be accredited under this new decree.
The new building for the Eurofins Villapharma BioPharma
laboratory located in Murcia (Spain) has now been completed,
increasing our capacity for chemistry testing services to serve
customer demand.
North America
In North America, which accounts for 31% of Group sales,
revenues increased by 17% to EUR 1,008m, compared to EUR 859m in H1
2020.
In North America, BioPharma business growth continued to be
strong across all services. Eurofins Discovery launched a new
biotherapeutics business start-up to serve the large molecule drug
discovery market. Eurofins Contract Development and Manufacturing
Organization (CDMO) initiated the construction of a new spray dryer
operation for its drug product business unit that will support
phase I/II development and niche commercial products. It is
expected to be completed in Q4 2021. Eurofins CDMO is also planning
to construct a new high potency Active Pharmaceutical Ingredient
(API) facility, which is expected to be completed in April 2022, as
well as a new large scale API plant in 2023 to accommodate
increasing demand.
Eurofins’ Clinical Diagnostics business in North America
continues to innovate new testing methods to expand its services
for transplant patients. Eurofins Viracor continued to invest in
research studies to demonstrate the utility of their innovative
assays, including a liver-specific Viracor TRAC study and a study
researching the benefits of combining the use of Viracor TRAC and
TruGraf testing. Both studies have been completed and are under
review for publication. Eurofins Transplant Genomics’ TruGraf test
saw steady quarter-on-quarter increases in sample volumes (+41% in
Q2 2021 vs. Q1 2021). Eurofins received its first nationwide
contract for TruGraf. Humana, a leading health care company that
offers a wide range of insurance products and health and wellness
services, will offer in-network coverage for the TruGraf blood gene
expression test to its Medicare kidney transplant patients,
effective August 1, 2021.
The Environment Testing business in North America was impacted
by restrictions around sample collection and adverse weather
conditions. Nonetheless, legislative and regulatory drivers are
supporting growth in Environment Testing, including litigation
related to specialty testing services such as PFAS and 1-4 dioxane
and a societal shift to increase focus around ESG. Eurofins has
reinforced its leadership position in Environment Testing with the
addition of differentiated services and technologies, specifically
PFAS in blood, serum, soil vapor and stack emissions as well as
non-target PFAS forensic testing, emerging pollutants (e.g. 6-PPD
Quinone) testing and dioxin testing.
Eurofins’ Food Testing businesses in North America continue to
develop and launch new testing methods. Eurofins DQCI was selected
by the American Dairy Products Institute (ADPI) and the Dairy Foods
magazine as an honouree in the 2021 Breakthrough Award for Dairy
Ingredient Innovation program for A1/A2 testing. Eurofins Food
Integrity and Innovation (EFII) initiated the development of a
method for the analysis of selected mycotoxins (aflatoxins and
ochratoxin A) in hemp plants and products. The method workflow
employs immunoaffinity clean-up columns (IAC) from Eurofins
Technologies and will be submitted for AOAC International Official
Method of Analysis consideration. Eurofins’ Good Manufacturing
Practice (GMP) microbiology laboratory in Horsham, Pennsylvania,
received dual ISO-17025 and cGMP certification for their robust
quality management system (QMS) from the American Association for
Laboratory Accreditation (A2LA). This is the first Eurofins
laboratory in North America to accomplish dual accreditation, and
it will enable Eurofins to support expanded and more rigorous
infant formula testing methods.
Rest of the World
In the Rest of the World, revenues increased by 38% to EUR 259m,
compared to EUR 188m in H1 2020.
Eurofins’ Food and Feed Testing laboratory footprint was
strengthened in Southeast Asia with new start-up laboratories
commissioned at Penang (Microbiology and Chemistry) and Johor
(Microbiology) in Malaysia and the addition of a food and dairy
microbiology laboratory in Singapore. In China, Eurofins
established new accredited pesticide residue methods to meet the
novel Chinese pharmacopoeia Maximum Residue Limit (MRL)
regulations.
In BioPharma services, there was a significant increase in
demand for CDMO services from India. Eurofins Central Laboratory in
China moved to a much larger new state-of-the-art building in
Shanghai to accommodate increasing demand for specialty testing to
support clinical research in China.
COVID-19 Response
Eurofins remained at the forefront of the fight against the
global pandemic launching new solutions to fight the spread of the
virus and its variants. Eurofins has now completed over 25 million
COVID-19 PCR tests since the start of the pandemic. Eurofins has
sequenced more than 125,000 SARS-CoV-2 samples from 23 countries
since its press release on 28 December 2020 announcing the launch
of a new ARTIC Next Generation Sequencing (NGS) service.
Clinical Enterprise, Inc., a Eurofins company, was awarded a
U.S. Government agreement to expand national COVID-19 testing. The
agreement with the U.S. Department of Health and Human Services, in
coordination with the U.S. Department of Defense (DOD), will expand
testing opportunities in K-8 schools, underserved populations and
congregate settings such as homeless shelters.
Eurofins Viracor launched COVID-19 inSIGHT™ T Cell immunity
testing to provide healthcare providers with critical insight to
aid treatment decisions. Eurofins Genomics launched SynPure LPA
(Linear Polyacrylamide) for use in COVID-19 testing and other
research and development applications.
Eurofins Technologies developed its GSD NovaType III SARS-CoV-2
RT-PCR assay for the rapid detection of SARS-CoV-2 Variants of
Concern. Eurofins also upgraded its COVID-19 wastewater testing
capabilities with variant detection capabilities. Eurofins Denmark
won the national surveillance contract for monitoring of wastewater
to track SARS-CoV-2 spread.
Through its SAFER@WORK™ programmes, Eurofins continues to enable
many industries to sustain or re-start operations. As of the end of
June 2021, over 3,250 SAFER@WORK™ contracts across 36 countries
have been signed or are in the final stages.
Eurofins has developed a broad network of testing centres to
facilitate summer travelling, including:
- Around 1,000 testing centres across Europe covering major
travel hubs, providing testing accessibility in a broad variety of
locations to facilitate summer travel;
- Mobile testing centres in France, Belgium and Germany to
process up to 200 PCR tests per day (each);
- The network is supported by an intuitive web-portal allowing
travellers to book appointments and access their testing
information.
Eurofins signed significant SAFER@WORK™ partnerships, including
with:
- Several cruise lines;
- Hotel Groups, to provide their guests with access to convenient
and affordable PCR testing;
- Airports, to set up testing facilities at a number of
airports;
- Private jet operators, to offer an exceptional level of safety
to private flight passengers;
As previously indicated the revenues from these contracts are
likely to fall in H2 2021, as they are dependent on employees
coming back to work and travel and leisure activities
recommencing.
Environmental, Social and Governance (ESG)
The Group continues to embed
best practices in business operations and make further progress on
all three dimensions of ESG. In July 2021, Eurofins’ Board of
Directors expanded the scope and duties of the Corporate Governance
Committee to include environmental and social matters relevant to
the Group and its stakeholders. The Committee was consequently
renamed as the Sustainability and Corporate Governance Committee
reflecting the importance of these topics and the Board’s focus
upon them. On 22 April
2021, Mr. Pascal Rakovsky was appointed as Lead Independent
Director.
Eurofins’ Carbon Footprint
Reduction programme was officially rolled out at regional level and
management responsibilities have been extended to local CO2
Champions and Business Leaders. All Business Units and more Senior
Leaders now have ESG targets, focused on gender diversity, safety,
environment and compliance, conditioning a part of their variable
compensation.
Recognising the Group’s
significant efforts towards ESG, Eurofins’ ESG rating by
Sustainalytics improved from 'Medium Risk' to 'Low Risk’ in June
2021. We remain committed to continuing to enhance our corporate
disclosures and, as an ESG enabler, to support our customers’
evolving testing needs and help them assess and improve their
environmental and social impact.
Infrastructure Programme
In the first six months of 2021, Eurofins has added 13,000 m2 of
laboratory, office and storage space through the delivery of
building projects, as well as acquisitions, new leases and
consolidation of sites.
The Group continued to focus on growth in Asia in H1 2021,
opening 7,000 m2 of state-of-the-art laboratory and office space in
its brand-new flagship building in Shanghai in April, acquiring a
4,000 m2 facility in Taiwan, as well as opening smaller
laboratories in Vietnam, Cambodia and Japan. There are scheduled
new facilities opening in H2 2021 in Chengdu (China), Thailand and
the Philippines.
Eurofins Calscience is nearing the completion of an almost 8,000
m2 highly efficient state-of-the-art laboratory building in Tustin,
California. This building will combine two large environmental
testing laboratories in the Los Angeles area, and house Eurofins
EMLab P&K, while providing space for additional Eurofins
operations and future expansion. Operations are scheduled to start
at the end of Q3 2021.
Also in Q3 2021, the construction of a new microbiology and
product testing competence centre in Aix-en-Provence (France) will
reach completion. This centre will cover over 4,000 m2 and will
combine five microbiological laboratories from the South-East of
France, as well as two product testing laboratories.
Eurofins is well on track to deliver its 2021 and 2022 plans for
expansion and modernisation of 83,500 m2 of laboratory and office
space.
Financial Review
Revenues grew by 41% from EUR
2,323m to EUR 3,272m in H1 2021. The Group’s Core Business
(excluding COVID-19 related clinical testing and reagent revenues)
delivered 17% organic growth in H1 2021 (16% vs. H1 2019, and close
to 13% vs. H1 2019 corrected for the EUR 62m estimated missing
revenues from the cyber-attack impact of June 2019) and 25% in Q2
2021 (19% vs. Q2 2019, and close to 13% vs. Q2 2019 corrected for
the EUR 62m estimated missing revenues from the cyber-attack impact
of June 2019). Revenues from COVID-19 related testing and reagents
were close to EUR 750m in H1 2021.
Record adjusted EBITDA of EUR
1,008m delivered in H1 2021 (+104% year-on-year), representing a
30.8% adjusted EBITDA margin (+960bps year-on-year).
Table 4: Separately Disclosed Items2
In EUR m except otherwise stated
H1 2021
H1 2020
One-off costs from integrations,
reorganisations and discontinued operations15, and other
non-recurring income and costs
-12
-11
Temporary losses and other costs related
to network expansion, start-ups and new acquisitions in significant
restructuring
-7
-24
EBITDA3 impact
-19
-35
Depreciation costs specific to start-ups
and new acquisitions in significant restructuring
-10
-17
EBITAS4 impact
-29
-52
Share-based payment charge and
acquisition-related expenses, net5
-60
-59
Net finance costs related to borrowing and
investing excess cash and one-off financial effects (net of finance
income)*
-96
-2
Tax effect from the adjustment of all
separately disclosed items
18
21
Non-controlling interest on separately
disclosed items
-
-0
Total impact on net profit attributable to
owners and hybrid investors
-167
-92
Impact on Basic EPS8 (EUR)
-0.87
-0.51
*Mostly one-off cost of early retirement
of bonds performed in Q2 2021
Separately Disclosed Items (SDI) at EBITDA level decreased by
46% to EUR 19m in H1 2021 and stood at 1.9% of adjusted EBITDA in
H1 2021 vs. 7.1% in H1 2020, in line with the Group’s objective of
targeting less than EUR 30m SDI per annum at EBITDA level.
Reported EBITDA increased 116% year-on-year to EUR 989m in H1
2021 from EUR 459m in H1 2020, representing a 30.2% reported EBITDA
margin, a 1,050bps improvement year-on-year.
Table 5: Breakdown of Reported EBITDA by Operating
Segment
In EUR m except otherwise stated
H1 2021
EBITDA
margin %
H1 2020
EBITDA
margin %
Growth %
Europe
652
32.5%
244
19.1%
167%
North America
304
30.1%
227
26.4%
34%
Rest of the World
77
29.6%
35
18.8%
117%
Other(1)
-44
-48
-
-9%
Total
989
30.2%
459
19.7%
116%
(1) Other corresponds to Group Service
Centres
In terms of EBITDA growth, Europe and the Rest of the World
benefited most, with Europe in particular recording a 167% growth
in reported EBITDA and a 1,340bps year-on-year change in reported
EBITDA margin. North America also delivered strong results, with
reported EBITDA growth of 34% and a 370bps EBITDA margin
improvement year-on-year. The Rest of the World segment delivered
117% growth in reported EBITDA and generated an EBITDA margin of
29.6% in H1 2021 (+1,080bps year-on-year). COVID-19 related
activities were accretive to Group margins.
Depreciation and amortisation (D&A) increased by 2%
year-on-year to EUR 204m. As a percentage of revenues, D&A
stood at 6.2% of Group revenues in H1 2021 vs. 8.6% in H1 2020, a
240bps decrease year-on-year, as the Group has now finalised the
vast majority of its significant 2015-2020 investment programme in
laboratories to create a network of state-of-the-art facilities in
large buildings enabling scale effects, with the most innovative
equipment and fully digital with advanced IT solutions. The Group
will continue to undertake significant IT investment projects to
fully digitalise and optimise its network of laboratories, their IT
solutions and IT security.
Net finance costs amounted to EUR 147m, representing a 199%
increase compared to H1 2020. The finance costs for the six months
ended 30 June 2021 include a one-off cost of EUR 92m from early
repayment of our 2022, 2023, 2024 and 2026 bonds, followed by the
successful issuance of a 10-year bond with a coupon below 1%. This
should decrease the Group’s average cost of financing to below 1.8%
from H2 2021 onwards.
Income tax expense increased to EUR 163m in H1 2021 vs. EUR 56m
in H1 2020 implying an income tax rate of 28.1% vs. 37.2% last
year. Income tax paid increased in H1 2021 to EUR 140m vs. EUR 18m
in H1 2020 as temporary support measures put in place by some
governments in 2020 were not repeated in 2021 and the Group was
able to utilise a smaller amount of tax loss carry forwards in H1
2021 compared to last year.
Reported net profit attributable to owners of the Company and
hybrid capital investors stood at EUR 415m (12.7% of revenues,
+339% compared to EUR 95m in H1 2020), resulting in a record basic
EPS of EUR 2.17 (+317% year-on-year vs. EUR 0.52 in H1 2020).
Cash Flow and Financing
Table 6: Cash Flow Reconciliation
In EUR m except otherwise stated
H1 2021
reported
H1 2020
reported
Y-o-Y
variation
Y-o-Y
variation %
Net cash provided by operating
activities
709
445
264
59%
Net capex (i)
-220
-130
-90
69%
Free Cash Flow to the Firm
489
315
173
55%
Acquisitions spend and other investments
(ii)
-57
-76
19
-25%
Net cash used in investing activities (i)
+ (ii)
-277
-205
-71
35%
Net cash (used in)/provided by financing
activities
-719
85
-803
-950%
Net (decrease)/increase in cash and
cash equivalents and bank overdrafts
-272
319
-591
-185%
Cash and cash equivalents and bank
overdrafts at end of period
639
614
25
4%
Net cash provided by operating
activities significantly increased in H1 2021, up 59% to EUR 709m
vs. EUR 445m in H1 2020. Net working capital12 increased to 6.6% of
the Group’s revenues in H1 2021 vs. 5.3% at the end of 30 June 2020
(calculated as a percentage of last quarter revenues times four) as
temporary postponements of social charges and tax payments put in
place by some governments in 2020 are no longer in place in
2021.
Net capex spend for the period
amounted to EUR 220m vs. EUR 130m in H1 2020, as the Group caught
up with some capex projects which had been cautiously frozen last
year at the onset of the COVID-19 pandemic.
Free Cash Flow to the Firm10
was EUR 489m, a significant increase of 55% compared to EUR 315m in
H1 2020. Net capex
increased 69% in H1 2021 representing 6.7% of Group revenues (vs.
5.6% of Group revenues in H1 2020).
On May 2021, Fitch Ratings
assigned an investment grade credit rating of BBB- with a stable
outlook to Eurofins. This second credit rating, equivalent to the
first credit rating of Baa3 (stable) assigned by Moody’s in July
2020, confirms Eurofins’ credit strength based on its leadership
positions in most of its activities and its underlying resilient
end-markets. It gives Eurofins greater flexibility for its future
financing needs. Shortly after, Eurofins successfully priced a new
EUR 750m 10-year 0.875%-coupon senior unsecured bond, purchased all
of its outstanding 2022 and 2023 bonds and some of its outstanding
2024 and 2026 bonds through make-whole calls or successful tender
offers. Thanks to these successful refinancing exercises, Eurofins
has reduced its corporate senior gross debt by almost EUR 500m,
while decreasing its average cost of financing to below 1.8% from
H2 2021 onwards.
Net debt11 at the end of June
2021 stood at EUR 2,015m (a reduction of 10% vs. EUR 2,242 at the
end of December 2020). The leverage ratio (net debt divided by last
12 months proforma adjusted EBITDA) decreased to 1.0x at the end of
June 2021, from 1.6x at the end of December 2020.
Acquisitions
During the first six months of
2021, the Group completed 12 acquisitions of which 6 were asset
deals. These companies / activities have been fully consolidated
from the date the Group took control of these entities. Prior to
their acquisition, these entities generated revenues of EUR 37
million for the year ended 31 December 2020 and employed
approximately 250 employees.
The businesses acquired
contributed to Eurofins’ consolidated revenues for EUR 12 million
and to consolidated net profit for EUR -0.3 million from their
acquisition date to 30 June 2021. The contribution to EBITDA for
the same period amounted to EUR 2 million. If these businesses had
been acquired as of 1 January 2021, the Group’s consolidated
revenues would have been increased by an additional EUR 8 million,
and consolidated net profit by EUR 0 million. The EBITDA would also
have been increased by an additional EUR 1 million.
Since 1 July 2021, Eurofins
has completed seven acquisitions. This includes the acquisition of
DNA Diagnostics Center (“DDC”), a leader in consumer genetic
testing in the United States for a purchase price of approximately
USD 172 million. DDC anticipates delivering revenues of over USD 55
million in 2021. Of the remaining six acquisitions, one is located
in North America, four in Europe and one in Rest of the World
(Japan).
The total annual revenues of
these acquisitions made since 1 July 2021 to date amounted to over
EUR 95 million in 2020 for an aggregate acquisition price of over
EUR 225 million including DDC. The businesses acquired employ
approximately 570 employees.
Summary unaudited interim condensed consolidated financial
statements for the period ended 30 June 2021:
Table 7: Summarised Income Statement
For the six months ended 30 June
In EUR m except otherwise stated
2021
2020
Reported
Results
Reported
Results
Revenues
3,272
2,323
Operating costs, net
-2,283
-1,865
EBITDA
989
459
EBITDA Margin
30.2%
19.7%
Depreciation and amortisation
-204
-200
EBITAS
785
259
Share-based payment charge and
acquisition-related expenses, net
-60
-59
EBIT
725
200
Finance income
1
2
Finance costs
-148
-51
Share of profit of associates
2
1
Profit before income taxes
579
151
Income tax expense
-163
-56
Net profit for the period
416
95
Attributable to:
Owners of the Company and hybrid capital
investors
415
95
Non-controlling interests
0
0
Basic earnings per share (EUR)*
- Total
2.17
0.52
- Attributable to owners of the
Company
2.09
0.43
- Attributable to hybrid capital
investors
0.09
0.09
Diluted earnings per share (EUR)*
- Total
2.07
0.50
- Attributable to owners of the
Company
1.99
0.41
- Attributable to hybrid capital
investors
0.08
0.09
Basic weighted average shares outstanding
- in millions
191
182
Diluted weighted average shares
outstanding - in millions
201
191
* Following a ten-for-one stock split in
November 2020, the figures for 2020 have been restated as if the
stock split had been effective on 1 January, 2020.
Table 8: Summarised Balance Sheet
In EUR m except otherwise stated
30 June
2021
31 December
2020
Reported
Results
Reported
Results
Property, plant and equipment
1,667
1,575
Goodwill
3,643
3,524
Other intangible assets
815
825
Investments in associates
7
6
Financial assets and other receivables
55
51
Deferred tax assets
61
77
Total non-current assets
6,248
6,057
Inventories
169
157
Trade receivables
978
949
Contract assets
338
245
Prepaid expenses and other current
assets
198
189
Current income tax assets
89
66
Derivative financial instruments
assets
0
0
Cash and cash equivalents
640
912
Total current assets
2,413
2,518
Total assets
8,661
8,576
Share capital
2
2
Treasury shares
-
-
Hybrid capital
1,000
1,000
Other reserves
1,555
1,543
Retained earnings
1,577
1,311
Currency translation reserve
-55
-165
Total attributable to owners of the
Company
4,079
3,690
Non-controlling interests
31
26
Total shareholders' equity
4,110
3,716
Borrowings
2,527
2,917
Deferred tax liabilities
116
115
Amounts due for business acquisitions
64
49
Employee benefit obligations
74
73
Provisions
12
8
Total non-current liabilities
2,793
3,163
Borrowings
128
238
Interest due on borrowings and earnings
due on hybrid capital
44
51
Trade accounts payable
531
542
Contract liabilities
163
137
Current income tax liabilities
123
84
Amounts due for business acquisitions
63
56
Provisions
26
36
Other current liabilities
679
552
Total current liabilities
1,758
1,696
Total liabilities and shareholders'
equity
8,661
8,576
Table 9: Summarised Cash Flow Statement
For the six months ended 30 June
In EUR m except otherwise stated
2021
2020
Reported
Reported
Cash flows from operating
activities
Profit before income taxes
579
151
Depreciation and amortisation
204
200
Share-based payment charge and
acquisition-related expenses, net
60
59
Financial income/(expense), net
144
46
Share of profit from associates
-2
-1
Transactions costs and income related to
acquisitions
-4
-3
Changes in provisions employee benefit
obligations
-7
-3
Other non-cash effects
0
-0
Change in net working capital
-128
13
Cash generated from operations
849
463
Income taxes paid
-140
-18
Net cash provided by operating
activities
709
445
Cash flows from investing
activities
Purchase of property, plant and
equipment
-200
-113
Purchase, capitalisation of intangible
assets
-23
-20
Proceeds from sale of property, plant and
equipment
3
3
Net capex
-220
-130
Free Cash Flow to the Firm
489
315
Acquisitions of subsidiaries net of cash
acquired and proceeds from disposals of subsidiaries
-58
-76
Disposals/(acquisition) of investments,
financial assets and derivative financial instrument, net
1
-1
Interest received
0
1
Net cash used in investing
activities
-277
-205
Cash flows from financing
activities
Proceeds from issuance of share
capital
13
545
Proceeds from borrowings
743
595
Repayments of borrowings
-1,249
-924
Repayments of lease liabilities
-74
-75
Dividends paid to shareholders and
non-controlling interests
-0
-
Earnings paid to hybrid capital
investors
-15
-15
Interests and premium paid
-136
-41
Net cash (used in)/provided by
financing activities
-719
85
Net effect of currency translation on cash
and cash equivalents and bank overdrafts
15
-5
Net (decrease)/increase in cash and
cash equivalents and bank overdrafts
-272
319
Cash and cash equivalents and bank
overdrafts at beginning of period
911
295
Cash and cash equivalents and bank
overdrafts at end of period
639
614
1 Adjusted results - reflect the ongoing performance of the
mature14 and recurring activities excluding “separately disclosed
items2”. 2 Separately disclosed items - include one-off costs from
integration, reorganisation, discontinued operations15 and 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 charges5,
impairment of goodwill, amortisation of acquired intangible assets,
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)
and the related tax effects. 3 EBITDA – Earnings before interest,
taxes, depreciation and amortisation, share-based payment charge,
impairment of goodwill, amortisation of acquired intangible assets,
negative goodwill, loss/gain on disposal and transaction costs
related to acquisitions as well as income from reversal of such
costs and from unused amounts due for business acquisitions. 4
EBITAS – EBITDA less depreciation and amortisation. 5 Share-based
payment charge and acquisition-related expenses, net – Share-based
payment charge, impairment of goodwill, amortisation of acquired
intangible assets, negative goodwill, loss/gain on disposal and
transaction costs related to acquisitions as well as income from
reversal of such costs and from unused amounts due for business
acquisitions. 6 EBIT – EBITAS less Share-based payment charge and
acquisition-related expenses, net. 7 Net Profit – Net profit for
equity holders after non-controlling interests but before payment
to Hybrid capital holders. 8 Basic EPS – earnings per share (basic)
total (to equity holders before payment of dividends to Hybrid
capital holders). Following a ten-for-one stock split in November
2020, the figures for 2020 have been restated as if the stock split
had been effective on 1 January 2020 . 9 Net capex – Acquisition of
intangible assets, property, plant and equipment, less proceeds
from the disposal of such assets. 10 Free Cash Flow to the Firm -
Net cash provided by operating activities, less Net capex. 11 Net
debt – Borrowings, less cash and cash equivalents. 12 Net working
capital – Inventories, trade receivables and contract assets,
prepaid expenses and other current assets less trade accounts
payable, contract liabilities and other current liabilities
excluding accrued interest receivable and payable. 13 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. 14
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. 15 Discontinued activities
/ disposals: 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. Disposals correspond to the
sale by Eurofins of business assets to a third party. For more
information, please refer to Note 3.20 of the Consolidated
Financial Statements for the year ended 31 December 2020.
Notes to Editors:
Conference Call
Eurofins will hold a conference call with analysts and investors
today at 15:00 CET 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:
UK: + 44 330 336 9105 US: + 1 646 828 8143 FR: + 33 176 772 274
BE: + 32 240 406 59 DE: + 49 692 222 134 20 Confirmation Code: 333
07 88
About Eurofins – the global leader in bio-analysis
Eurofins is Testing for Life. Eurofins is the global leader in
food, environment, pharmaceutical and cosmetic product testing and
in agroscience Contract Research Organisation services. Eurofins is
one of the market leaders in certain testing and laboratory
services for genomics, discovery pharmacology, forensics, advanced
material sciences and in the support of clinical studies, as well
as having an emerging global presence in Contract Development and
Manufacturing Organisations. The Group also has a rapidly
developing presence in highly specialised and molecular clinical
diagnostic testing and in-vitro diagnostic products.
With 55,000 staff across a decentralised and entrepreneurial
network of 900 laboratories in over 50 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.
The Group’s objective is to provide its customers with
high-quality services, innovative solutions and accurate results on
time. Eurofins is ideally positioned to support its clients’
increasingly stringent quality and safety standards and the
increasing demands of regulatory authorities as well as the
requirements of healthcare practitioners around the world.
In 2020, Eurofins reacted quickly to meet the global challenge
of COVID-19, by creating the capacity to help over 20 million
patients monthly who may have been impacted by the pandemic with
our testing products and our services and directly supporting
healthcare professionals working on the front line to fight the
virus. The Group has established widespread PCR testing
capabilities and has carried out over 25 million tests in its own
laboratories, is supporting the development of a number of vaccines
and has established its SAFER@WORK™ testing, monitoring and
consulting programmes to help ensure safer environments, travel and
events during COVID-19.
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210804006147/en/
For more information, please visit www.eurofins.com or
contact: Investor Relations Eurofins Scientific SE Phone: +32 2
766 1620 E-mail: ir@eurofins.com
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