Sartorius Share: Well Prepared Even Without Corona

Dhe Göttingen-based laboratory equipment supplier has the typical roller coaster ride of the pandemic winner behind it: when they discovered that Sartorius products play an important role in, among other things, upscaling vaccine production to a mass scale, enthusiastic investors drove the share price to dizzying heights. But with the progress of the vaccination campaign, increasing easing and, last but not least, an interest rate and inflation environment that was challenging for growth companies, the government suffered Long-term winner enters his Nimbus. Sartorius shares have now lost around a third of their all-time high reached at the end of 2021.

Sales increase of 50 percent

This offers opportunities for providers, after all, the operative business was able to convince in the end. Even more important: The outlook shows that Sartorius can grow strongly even without special Corona effects.

Sartorius achieved currency-adjusted sales growth of almost 50 percent in 2021, around five percentage points of which were due to acquisitions. Just like the share price, the operating business also experienced a special effect last year due to the pandemic: CEO Joachim Kreuzburg attributed around 20 percentage points of growth to pandemic effects. At the annual general meeting, the CEO rightly spoke of an intense but extremely successful year.

The company’s two divisions contributed to this to varying degrees. The Bioprocess Solutions (BPS) division grew significantly with a currency-adjusted increase in sales of almost 55 percent. It includes the product portfolio for the production of biopharmaceuticals, including media for cell cultures, bioreactors and solutions for separating, cleaning and storing biological products. BPS is the central sales driver at Sartorius. In the past fiscal year, the division contributed around 79 percent to Group sales and delivered higher margins.

Significantly higher margins

The second business area, Lab Products & Services (LPS), generates significantly less revenue accordingly. In terms of sales, however, this increased by 32 percent. The division bundles the offers to laboratories and research institutions. These include, for example, solutions for bioanalysis, but also the right equipment such as laboratory scales or pipettes, as well as services.

Sartorius intends to continue growing with both divisions and is aiming for sales growth of 15 to 19 percent for the current year, based on the 3.45 billion euros from 2021. As in the previous year, the company expects sales from pandemic-related transactions of around 500 million euros.

In addition to sales, the margins at the Göttingen-based company have recently increased more than expected. The Ebitda margin rose to around 34 percent in 2021, compared to less than 30 percent a year earlier. CEO Kreuzburg knows about the peculiarity of this increase, one has seen margin increases in the two years that would otherwise have been achieved in four years. Accordingly, the target for the current financial year is more cautious, the Ebitda margin should remain at the high level of the previous year.

In the important area of ​​bioprocess solutions, higher growth is expected in terms of sales and Ebitda margin, whereas the Lab Products & Services division is expected to see a significantly lower increase in sales with growth of six to ten percent.

In order to achieve its own growth targets, Sartorius is focusing primarily on the USA and Asia. Kreuzburg sees the “most innovative market” in the USA, while Asia is showing high growth. China in particular is developing into a biopharmaceutical location. Accordingly, Sartorius intends to increase its sales and service capacities in key markets and expand local production networks.

series of acquisitions

In addition to organic gains, acquisitions continue to play an important role at the Göttinger company. In 2021, acquisitions contributed around five percentage points to Group growth. Last year, Sartorius took over the majority in the Freiburg-based reagent manufacturer CellGenix and acquired the Bielefeld-based company Xell, a specialist in cell culture media. The two acquisitions strengthened the company in the areas of cell and gene therapies and vaccines. At the beginning of 2022, Sartorius expanded its bioanalytics portfolio with the Jena-based laboratory technology company ALS Automated Lab Solutions. The chromatography business of the French Novasep was added from abroad. Acquisitions should contribute around two percent non-organic growth in the current financial year.

With its own growth and strategic acquisitions, the group is also gearing itself to fulfilling its medium-term goals: for the period from 2015 to 2025, the company is aiming to double sales roughly every five years, which requires average growth of around 15 percent per year .

The Group target for 2025 is for sales of five billion euros, with the bulk of it coming from the Bioprocess Solutions division at 3.8 billion euros. These medium-term targets do not assume any further pandemic-related business. In terms of profitability, on the other hand, little should be done, the Ebitda margin is expected to be around 34 percent at the current level.

Chance: Given the growth prospects, the current price level offers an attractive opportunity for long-term investing.

Image sources: T. Schneider / Shutterstock.com