Regulatory News:
Eurofins (Paris:ERF):
- Q3 2020 revenues increased 21.0% year-on-year to EUR 1,413m vs.
EUR 1,167m in Q3 2019. Over the first nine months of 2020 (NM
2020), revenues grew 12.0% to EUR 3,736m vs. EUR 3,335m during the
same period last year.
- Organic growth1 was very strong at +22.7% (+21.9% after
correcting for the impact of the cyber-attack in 2019 and fires at
two laboratories in 2020) in Q3 2020 and +11.1% (+9.0% corrected
for cyber-attack and fires) over NM 2020.
- In spite of the continued COVID-19 pandemic related business
disruptions, Eurofins core business (excluding any COVID-19
clinical testing and reagents revenues) returned to small positive
organic growth in Q3 2020, once again demonstrating the strong
resilience of Eurofins’ end markets. Many of Eurofins’ core
businesses across Food, Environment and BioPharma testing achieved
more than 5% organic growth in Q3 2020.
- Eurofins continues to demonstrate its strong commitment towards
supporting healthcare providers and national and state authorities
in their ongoing efforts to mitigate the spread and impact of the
virus. A couple of recent highlights include:
- Last week, a Eurofins company received an Emergency Use
Authorization (EUA) from the U.S. Food and Drug Administration
(FDA) for their At Home COVID-19 Nasal PCR Test. Results are
provided via email within 24 hours of sample receipt. This is a
major milestone in facilitating access to a very sensitive test as
sampling by healthcare professionals is often a bottleneck to
access gold standard PCR testing.
- Eurofins is expanding its offering for COVID-19 testing to
include flu and respiratory viruses and a number of new modalities
to facilitate patients access to tests and speed of testing. It
could be that broader respiratory pathogens testing become much
more frequently requested also beyond 2021.
- More information can be found in the “COVID-19 related business
developments” section of this release and at:
https://www.eurofins.com/covid-19-response/.
- Given the impossibility to predict the evolution of the
COVID-19 pandemic in 2020 and 2021, the Group has decided to leave
its objectives for those two years unchanged (2020-2021 objectives
were set before the onset of the COVID-19 pandemic). Actual results
may exceed these significantly, particularly in 2020, but this
cannot be quantified at this time. The Group is introducing 2022
objectives, as 2022 should hopefully be the first year where the
pandemic is brought under control and without any COVID-19 related
impact (neither positive nor negative). Eurofins management is
confident that the Group should be able to achieve or exceed these
2020-2022 objectives set as follows:
- For 2020, achieve EUR 5bn of revenues, including 5% from
organic growth, EUR 1.1bn adjusted2 EBITDA4 and EUR 600mA Free Cash
Flow to the Firm5. Only the acquisition component that those
objectives included (EUR 200m revenues acquired at mid-year) has
been revised down to EUR 150m in annual sales (of which ca. EUR 50m
sales to be consolidated in 2020) for a total spend of only ca. EUR
200m. Given the significant COVID-19 clinical testing and reagents
revenue contribution in Q3 2020, which is unfortunately likely to
continue in the next few months, and despite the continued negative
impact of the pandemic on some other parts of the business,
Eurofins will very likely significantly exceed its objectives for
2020.
- For 2021, achieve EUR 5.45bn revenues, including 5% from
organic growth, EUR 1.25bn adjusted EBITDA and EUR 700mA Free Cash
Flow to the Firm as first set on 04 March 2020 at constant average
2019 FX rates. Only the acquisition component that those objectives
included (EUR 200m revenues acquired at mid-year) has been revised
down to EUR 150m in annual sales acquired at mid-year due to the
likely disruptions and limitations to travel that may continue to
be caused by the pandemic. As can be judged today, it is
unfortunately likely that COVID-19 testing may continue well into
2021, which could cause Eurofins to exceed its objectives.
- For 2022, achieve EUR 5.7bn revenues, including a 5% organic
CAGR on the core non COVID-19 testing and reagents business from
2019 and EUR 100m from acquisitions (EUR 200m annual revenues
consolidated at mid-year), EUR 1.35bn adjusted EBITDA and EUR 800m
Free Cash Flow to the Firm. This assumes that the pandemic has been
brought under control by then, underlying markets, including food
service, hospitality and travel recover to historical levels and
sampling and clinical research activities can resume as normal, by
early 2022 and no COVID-19 clinical reagents and testing revenues
in 2022 (objectives set at constant FX rates as of
30/09/2020).
- Beyond 2022, continued organic growth of at least 5% per annum
and increasing margins and cash flows.
- Eurofins also expects to bring its leverage (net debt /
adjusted EBITDA) below 2x by the end of 2022. Beyond this, Eurofins
plans to keep a conservative balance sheet, its long-term oriented
funding strategy and to retain its Investment Grade credit rating
as well as above industry average ESG ratings.
- These objectives reflect the continuation of a strong focus on
margins and cash flow generation, which has not been derailed by
the COVID-19 related activities as these are at or above Group
margin and as Eurofins’ 5 years programme to build a world-class
fully digitalised hub and spoke laboratory network will be
completed soon.
- Following the recent successful refinancing of the Schuldschein
loans maturing in July 2022, Eurofins has extended the average life
of its senior debt instruments from 3.3 years to 4.1 years.
- Eurofins has received an additional ca. EUR 20 million from its
insurers in October 2020 to compensate for the lost gross margin
resulting from the 02 June 2019 cyber-attack, bringing the total
proceeds received to date to ca. EUR 40 million. It continues to
expect to receive additional refunds over the coming months.
- On 16 October 2020, Eurofins announced that its board of
directors is proposing a ten-for-one stock split at the
extraordinary general meeting to be held on 16 November 2020. The
stock split should improve trading liquidity and make stock
ownership more accessible to a broader base of investors, including
employees.
Comments from the CEO, Dr. Gilles Martin:
“Q3 2020 was a positive
quarter for Eurofins as the Group companies’ agility and speed of
innovation enabled it to deliver very strong organic growth in
spite of the pandemic. Our financial performance is concrete
evidence of our positioning in attractive end markets as well as
the results of years of investments to build a global network of
state-of-the art laboratories and leading R&D teams which has
enabled us to mobilise quickly and develop solutions to support
healthcare authorities and our clients fighting the
pandemic.
The core business (excluding
COVID-19 clinical reagents and testing revenues) recovered to small
positive organic growth in Q3 2020 whilst we saw strong demand for
COVID-19 testing. Although Eurofins exposure to clinical testing
and IVD products is recent (it only started in 2014) and small
(under 20% of Group revenues in 2019), cooperation with other Group
companies enabled an outsized impact on overall Group results in
Q3.
Many of Eurofins’ core
businesses (excluding COVID-19 clinical reagents and testing)
already grew organically well over 5% in Q3 2020 in all business
lines (Environment, Food and BioPharma Product testing in
particular). The gap to 5% organic growth in Q3 2020 of Eurofins
core business is mostly due to some businesses where revenues are
still down compared to Q3 2019 due to disturbances caused by the
pandemic. Food service, restaurants, hospitality, travel and
activities requiring on-site sampling or patient’s enrolment for
clinical trials still see many restrictions in several countries
and thus continued to require less testing services than usual in
Q3 2020. Clients relationships remain strong though and a
resumption of these activities to normal is expected when the
pandemic is brought under control.
Today the Group also announces
its new objectives for 2022, in which hopefully the pandemic will
have been brought under control and there may be no COVID-19
related impact (neither positive nor negative). These new
objectives assume that, by then, the lost growth of the non
COVID-19 testing core business compared to the 5% objective in 2020
due to the lockdowns and travel restrictions will be caught back in
full as was the case for the revenues lost due to the 2019
cyber-attack.
Beyond 2022, Eurofins sees a
strong outlook for its core Biopharma, Food, Genetic, Cosmetic,
Environment and advanced esoteric Clinical testing activities.
Indeed the pandemic may well have a positive impact on the growth
of Eurofins markets over the medium-term.
I am humbled by the talent,
energy and commitment of Eurofins employees and leaders around the
world and the positive impact they are increasingly making to
society. Their outstanding response to the COVID crisis bodes well
for the potential of Eurofins’ Testing for Life services for many
years to come.”
Table 1: NM 2020 Organic Growth Calculation and Revenue
Reconciliation
EURm (unless otherwise
stated)
NM 2019 reported revenues
3,335
+ NM 2019 acquisitions - revenue part not
consolidated in NM 2019 at NM 2019 FX rates
41
- NM 2019 revenues of discontinued
activities / disposals5
(19)
= NM 2019 pro-forma revenues (at NM 2019
FX rates)
3,357
+ NM 2020 FX impact on NM 2019 pro-forma
revenues
(14)
= NM 2019 pro-forma revenues (at NM
2020 FX rates) (a)
3,343
NM 2020 organic scope* revenues (at NM
2020 FX rates) (b)
3,714
NM 2020 organic growth rate
(b/a-1)
11.1%
NM 2020 acquisitions - revenue part
consolidated in NM 2020 at NM 2020 FX rates
16
NM 2020 revenues of discontinued
activities / disposals5
6
NM 2020 reported revenues
3,736
* Organic scope consists of all companies that were part of the
Group as at 01/01/2020. This corresponds to the 2019 pro-forma
scope.
Table 2: Geographical Revenue Breakdown
(EUR m)
NM 2020
As % of total
NM 2019
As % of total
Growth %
Europe
2,091
56.0%
1,815
54.4%
15.2%
North America
1,354
36.2%
1,239
37.2%
9.3%
Rest of the World
291
7.8%
280
8.4%
3.8%
Total
3,736
100%
3,335
100%
12.0%
By geography, Eurofins’
revenue growth for NM 2020 was 15.2% in Europe, 9.3% in North
America and 3.8% in the Rest of the World, reflecting the different
business exposures between regions and how those have been affected
by the pandemic (Eurofins has limited Clinical Diagnostics and
BioPharma testing activities in the Rest of the World).
Revenues in Europe expanded by
15.2% in NM 2020 driven by strong performance in a number of
business lines, including BioPharma and Agroscience testing
services, which both grew high single digit across Europe. In
routine Clinical Diagnostics, which is mostly based in France and
to a lesser extent Spain, Germany and Benelux, the business saw
very strong demand for COVID-19 tests, most notably PCR tests as
well as IVD solutions. On the other hand, non COVID-19 clinical
testing volumes greatly suffered from the pandemic before
rebounding in the summer. Environment testing was more contrasted
as some areas saw high single digit revenue performance in NM 2020
whilst others were still down. Most core businesses saw a rebound
in the course of Q3 2020 even though demand remained weaker in some
areas (e.g. catering and hospitality), particularly in
France.
In North America, revenues
expanded 9.3% in NM 2020 as the BioPharma services business line
grew high single digit and the Food testing activities showed
resilience with organic growth close to 5% in NM 2020 whilst
Environment testing remains in negative territory, in line with the
market.
In the Rest of the World,
Food, Environment and BioPharma testing services experienced a
strong rebound across the Asia Pacific region with high single
digit organic growth in Q3 2020 and above 5% in NM 2020. On the
other hand, in South America, Food and Environment testing services
remained in negative territory in NM 2020, even if slowly
recovering in Q3 2020.
COVID-19 related business developments
Since March 2020, Eurofins has
demonstrated its strong commitment towards supporting healthcare
providers and national and state authorities in their ongoing
efforts to mitigate the spread and impact of the virus. Some
developments that have taken place since the Group reported its H1
2020 results are highlighted below.
In August 2020, Eurofins
Technologies launched its GSD NovaPrime® RNA Extraction kits, which
are reagents for automated extraction of genomic SARS-CoV-2 RNA
(ribonucleic acid) from clinical swab samples. The extraction kits
work with a large range of existing automation equipment for
subsequent real-time RT-PCR (reverse transcription polymerase chain
reaction) analysis using approved IVD kits, thereby enabling
laboratories to meet unprecedented demand for COVID testing
capacity.
In August 2020, Eurofins
Clinical Diagnostics U.S. launched its pooled PCR test, a lower
cost highly accurate COVID-19 PCR test. Pooling can be used to
continuously and cost-effectively monitor low-risk groups that show
a low prevalence of COVID-19 infection. It can also be used as part
of surveillance testing.
In September 2020, Eurofins
Diatherix continued to leverage its extensive respiratory and
infectious disease expertise with the launch of Flu Plus, a new
test to identify SARS-CoV-2 and five additional and most prevalent
viruses associated with respiratory illnesses.
In October 2020, Eurofins
launched Europe’s first validated test method to evaluate
filtration capacity of masks for SARS-CoV-2. The test can be used
to evaluate the efficacy and safety of surgical masks and hygienic
masks against COVID-19. Eurofins Textile Testing Spain is currently
the only laboratory in Europe and one of only three laboratories in
the world to offer such a test, which is mandatory for all masks
sold in the North American market.
In October 2020, following the
recommendations from French health authorities to help combat the
second wave of the COVID-19 pandemic, and in order to respond to
increased testing demand, Eurofins Biomnis announced it was
creating additional capacity of 15,000 tests per day carried out
within 24 hours.
In October 2020, Eurofins U.S.
Clinical Diagnostics announced the launch of its Eurofins At-Home
COVID-19 Nasal PCR Test. The FDA EUA-authorised, self-collection
kit gives consumers a painless, convenient and quick option to
detect the virus from the comfort of their home. Results are
reviewed by a licensed physician and provided via email within 24
hours of sample receipt. This innovation should go a long way
towards making sensitive PCR testing available more broadly by
alleviating sampling personnel bottlenecks.
Other business developments
Whilst many of Eurofins
employees and other resources have been focused on and allocated to
developing COVID-19 testing solutions and capacity in record time
since March 2020, the Group has at the same time continued to make
progress towards building a unique global network of fully
digitalised state-of-the-art laboratories, market leadership
positions, scale and scientific excellence to offer even better,
faster, more cost effective and innovative services to its clients
in other parts of the business. The Group is close to completing
its five years laboratories infrastructure development programme.
Some of the many developments that have taken place since the Group
reported its H1 2020 results are highlighted below.
In August 2020, Eurofins
became the market leader in non-invasive prenatal testing (NIPT) in
Japan with the acquisition of GeneTech Inc., a leading player in
genetic analysis in Japan with over EUR 10 million revenues in
2019.
In August 2020, Eurofins
Discovery expanded its
chemistry capacity to serve customer demand in the growing market
of outsourced drug discovery with a new building nearing completion
at Eurofins Discovery’s flagship chemistry site at Eurofins
Villapharma in Murcia, Spain.
In September 2020, Eurofins
became the market leader in environment testing in Taiwan with the
acquisition of the SunDream Group, the second largest player in the
market employing over 350 staff.
In September 2020, Eurofins
Technologies announced that its ELISA assay (enzyme-linked
immunosorbent assay) for the detection of aflatoxin M1, I’screen
AFLA M1 milk, has been granted AOAC Research Institute Performance
Tested MethodsSM status (AOAC Cert. No. 072002) for use with raw
bovine whole milk, skim milk and powdered milk. Receiving the AOAC
Performance Tested MethodsSM status demonstrates Eurofins
Technologies’ commitment to providing high quality test methods for
its food safety customers. The I’screen AFLA M1 milk testing kit is
the first screening method to receive AOAC approval for aflatoxin
M1 analysis in milk commodities.
In October 2020, Eurofins’
Expertise Centre for Complex Carbohydrates & Chemistry (CCC)
announced the development and availability of a new method for the
identification of fructans in infant formula and adult nutritionals
matrices. CCC co-developed, in close co-operation with Nestlé
Research (Lausanne, Switzerland), this novel method and managed the
necessary collaborative study to fulfil the specific official
standard method performance requirements. Fructans, including
inulin and fructo-oligosaccharides (FOS), are added as ingredients
to all kinds of food, feed and pet food products. Fructans are
mandatory components in infant formula and adult nutritionals and
they are strictly regulated by various authorities
worldwide. By having
significantly contributed to develop and validate internationally a
method that now has received the official standard status by AOAC,
ISO and IDF, the Eurofins CCC demonstrates Eurofins’ commitment to
providing high quality test methods for its food industry
customers.
- 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 operations7. 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 from 01 January Y-1. All revenues from businesses
acquired since 01 January Y are excluded from the calculation.
- Adjusted - reflects the ongoing performance of the mature6 and
recurring activities excluding “separately disclosed items3”.
- Separately disclosed items - includes one-off costs from
integration, reorganisation, discontinued operations7 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 charge8,
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, net
finance costs related to borrowing and investing excess cash and
one-off financial effects (net of finance income) and the related
tax effects.
- 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.
- Free Cash Flow to the Firm - Net cash provided by operating
activities, less Net capex.
- 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.
- 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 3.18 of
the Consolidated Financial Statements for the year ended 31
December 2019.
- Share-based payment charge and acquisition-related expenses,
net – Share-based payment charge, impairment of goodwill,
amortisation of acquired intangible assets, loss/gain on disposal,
negative goodwill and transaction costs related to acquisitions as
well as income from reversal of such costs and from unused amounts
due for business acquisitions.
Conference Call
Eurofins will hold a conference call with analysts and investors
today at 15:00 pm 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 (no pin code is
required):
UK +44 3333 009 272 U.S. +1 8335 268 347 France +33 1707 507 18
Germany +49 6913 803 452
Notes to Editors:
About Eurofins – the global leader in bio-analysis
Eurofins Scientific, through its subsidiaries (hereinafter
“Eurofins” or “the Group”), believes it is the global leader in
food, environmental, pharmaceutical and cosmetics products testing
and in agroscience CRO services. It is also one of the global
independent market leaders in certain testing and laboratory
services for genomics, discovery pharmacology, forensics, CDMO,
advanced material sciences and in the support of clinical studies.
In addition, Eurofins is one of the leading global emerging players
in esoteric and molecular clinical diagnostic testing. With over
50,000 staff across a network of more than 900 independent
companies in over 50 countries generally specialised by end
client markets and operating more than 800 laboratories,
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. The Group’s objective is to provide its customers
with high-quality and innovative services, accurate results on time
and, when requested, expert advice by its highly-qualified
staff.
Eurofins is committed to pursuing its dynamic growth strategy by
expanding both 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 and a very large
range of testing methods.
As one of the most innovative and quality-oriented international
groups in its industry, Eurofins is ideally positioned to support
its clients’ increasingly stringent quality and safety standards
and the increasing demands of regulatory authorities and healthcare
practitioners around the world.
Shares in Eurofins Scientific are listed on the Euronext Paris
Stock Exchange (ISIN FR0000038259, 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.
Eurofins provides in the Income Statement certain alternative
performance measures (non-IFRS information such as “Adjusted
Results2 and Separately Disclosed Items3”) that exclude certain
items because of the nature of these items and the impact they have
on the analysis of underlying business performance and trends.
In addition, Eurofins shows the following measures: “Organic
growth1” and “EBITDA4” with the objective to be close and
consistent with the information used in internal Group reporting to
measure the performance of Group companies and information
published by other companies in the sector.
Management believes that providing these APMs (Alternative
Performance Measures) enhances investors' understanding of the
company’s core operating results and future prospects, consistent
with how management measures and forecasts the company’s
performance, especially when comparing such results to previous
periods or forecasts and to the performance of our competitors.
This information should be considered in addition to, but not in
lieu of, information prepared in accordance with IFRS. These APMs
are described in more detail in the Condensed Interim Consolidated
Financial Statements for the period ended 30 June 2020 in Note 1
and in the Consolidated Financial Statements 2019 in Notes 1.27 and
1.28.
A 2020-2021 FCFF objectives have been restated to take into
account the cash flow statement reclassification performed in H1
2020.
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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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