Eurofins Raises Its 2016 Profit Objectives and Sets Preliminary Eur 2.9bn Revenue Objective for 2017
September 21 2016 - 1:40AM
Business Wire
Regulatory News:
Eurofins (Paris:ERF):
21 September 2016
- On the back of the strong performance
of most of the Group’s businesses in H1 2016, and organic growth
remaining above the Group’s 5% objective in July and August,
Eurofins is raising its adjusted EBITDA objective for the full year
2016 from EUR 460m to EUR 480m.
- Year to date the Group has completed 23
small acquisitions which generate about EUR 140m in annual revenues
and average EBITDA margins close to mid-teen level. Since June 30,
2016, Eurofins has spent EUR 58m on acquisitions, bringing the
total spend year to date to about EUR 150m, close to 1x the
revenues of the companies acquired.
- Until the end of the year, based on the
current pipeline, the Group management is confident to reach or
exceed its full year objective to add EUR 200m of annual revenues
from small acquisitions (about EUR 60m in addition to the total
revenues already acquired year to date) at similar multiples as
those completed year to date. These acquisitions will only be
consolidated for a few months in 2016. Hence the reported revenue
impact of small acquisitions completed in 2016 should be less than
EUR 100m but Eurofins confirms its objective to reach reported
revenues of EUR 2.5bn in 2016.
- If the level of small acquisitions
expected from the current pipeline is achieved, even if organic
growth for the remainder of the year was to revert to the 5% annual
objective, and assuming no large acquisitions beyond those
mentioned above, management believes that the Group should be able
to achieve pro-forma revenues of EUR 2.65bn and pro-forma adjusted
EBITDA of close to EUR 500m in 2016.
- From there on, assuming only 5% organic
growth, no acquisitions, and very modest margin improvement in
2017, Eurofins would reach close to EUR 2.8bn annual revenues and
EUR 530m of adjusted EBITDA (at constant currency); i.e. slightly
more than the June 30, 2016 net debt corrected for the EUR 294m of
net proceeds from the equity issuance on September 8, 2016 (EUR
523m = EUR 817m net debt at 30 June 2016 – EUR 294m net proceeds
from equity raise). Based on achieving its annual objective of 5%
organic growth and acquiring small companies generating total
annual revenues of EUR 200m in 2017, Eurofins should be able to
reach revenues of at least EUR 2.9bn (EUR 3bn pro-forma) and
continue to deliver margin improvements in 2017.
- Final objectives for 2017 will be set
when the Company reports its FY 2016 results in Q1 2017, but it is
likely that an objective of EUR 550m of adjusted EBITDA may be set
for 2017 subject to no currency change, continued good business
performance, and acquisitions to be carried out until the end of
2017 having profitability levels close to that of the Group.
- Should Eurofins achieve revenues of EUR
2.9bn in 2017, the annual growth required to reach its EUR 4bn
revenue objective by 2020 would be only 11.3% per year for 2018,
2019 and 2020.
- Continued strength across most of our
businesses allow management to remain positive that the Group is
well on track to achieve these 2020 objectives of reaching EUR 4bn
of revenues and EUR 800m in adjusted EBITDA. Furthermore, Eurofins
leadership is committed to maintaining a disciplined approach to
acquisitions to achieve its target return on capital employed, and
now often favors organic start-ups when this does not appear
possible in certain markets.
- The management is equally committed to
creating further flexibility in the Group’s capital structure as
part of its mid-term plans as reflected in the reduction in its
leverage ratio from 2.54x net debt/adjusted EBITDA on 31 December
2015 to 1.88x on 30 June 2016 (1.16x if corrected for the EUR 294m
raised in the successful equity offering on 08 September 2016).
Should the Group develop as described in the paragraphs above (with
5% organic growth and modest margin improvements) and carry out
only small acquisitions adding EUR 200m of revenues per year at
current multiples, net debt to adjusted EBITDA could well remain
below 1.5x in 2016 and 2017.
Comment from Dr. Gilles Martin, Eurofins CEO: “In 2016,
we have been making good progress towards our financial,
acquisitions and operational mid-term objectives. The Group should
complete the vast majority of its planned laboratory infrastructure
investments by the end of 2017, so that it will be equipped with
very effective platforms to compete in its markets and provide
clients with an unequalled level of service. This, combined with
the completion of 35 startup laboratories by the end of 2017, and a
number of new exclusive tests out of its R&D, bode well for
strong, sustainable growth.
As previously communicated and as part of our objectives for
2016, Eurofins is also making strides in optimizing its balance
sheet and increasing funding flexibility. The equity offerings in
June and September 2016 not only reduced the Group’s leverage ratio
but also created significant financial flexibility, with the
ability to pursue larger value-accretive acquisitions in addition
to its objective of adding EUR 200m per year from small
acquisitions whilst staying within its 3.5x net debt/adjusted
EBITDA covenant limit. Furthermore, should the Group carry out a
very significant acquisition which could bring our net debt
temporarily beyond this level, the management intends to actively
and quickly manage the Group’s leverage down to regain flexibility
for further acquisitions.
Thus, Eurofins is getting stronger than ever– both in terms of
laboratory infrastructure and financial scale - to benefit from
positive developments and opportunities in its markets, and respond
swiftly to value-creative opportunities while not incurring
inordinate debt levels”.
Notes for the editor:
Eurofins – a global leader in bio-analysis
Eurofins believes it is the world leader in food, environment
and pharmaceutical products testing and that it is also one of the
global independent market leaders in certain testing and laboratory
services for agroscience, genomics and discovery pharmacology and
for supporting clinical studies. In addition, Eurofins is one of
the significant emerging players in specialty clinical diagnostic
testing in Europe and the USA.
With 25,000 staff in more than 250 laboratories across 39
countries, Eurofins offers a portfolio of over 130,000 validated
analytical methods for evaluating the safety, identity,
composition, authenticity, origin, traceability and purity of
biological substances and products, as well as for innovative
clinical diagnostic. The Group provides its customers with
high-quality services, accurate results on time and 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 the most
comprehensive range of testing methods.
As one of the most innovative and quality oriented international
players in its industry, Eurofins is ideally positioned to support
its clients’ increasingly stringent quality and safety standards
and the expanding demands of regulatory authorities and healthcare
practitioners around the world.
The shares of Eurofins Scientific are listed on the Euronext
Paris Stock Exchange (ISIN FR0000038259, Reuters EUFI.PA, Bloomberg
ERF FP).
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 judgement
of Eurofins Scientific’ 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 guarantee can be made as to their validity.
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version on businesswire.com: http://www.businesswire.com/news/home/20160920007014/en/
For more information, please visit
www.eurofins.com or contact:Investor
RelationsEurofins ScientificPhone: +32 2 766
1620E-mail:ir@eurofins.com
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