bioMérieux - First-Half Results at June 30, 2012

Tue Sep 4, 2012 12:00pm EDT

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bioMérieux - First-Half Results at June 30, 2012

Regulatory News:

Solid financial performance:

  • €128 million in operating income before non-recurring items, up 6.5%
  • Strong increase in cash flow

Faster expansion in emerging markets:

  • India: acquisition of molecular biology specialist RAS
  • Emerging 7*: organic sales growth of 24%
  • bioMérieux China: now the Group’s third largest company

The Board of Directors of bioMérieux (Paris:BIM), a world leader in the field of in vitro diagnostics, met today to approve the consolidated financial statements for the six months ended June 30, 2012. The meeting was chaired by Jean-Luc Belingard and attended by the Statutory Auditors, who had performed a limited review of the financial statements.

Consolidated Data

In € millions

  Six Months Ended
June 30, 2012
  Six Months Ended
June 30, 2011
  % Change
As Reported
Sales 750 673 +11.4%
Operating income before non-recurring items 128 120 +6.5%
Operating income 125 119 +5.0%
Net income of consolidated companies 80 75 +6.5%
Free cash flow 69 36 x 1.9

“Thanks to strict financial discipline, bioMérieux achieved solid first-half results in a challenging economic environment,” said Jean-Luc Belingard, Chairman and Chief Executive Officer. “Consolidated operating income before non-recurring items rose by 6.5% over the period and free cash flow almost doubled. In addition, our presence in emerging markets was deepened during the summer by the acquisition of RAS, an Indian molecular biology company. Backed by our unique strategic positioning, our competitiveness and our robust financial resilience, we are maintaining our 2012 objectives.”

* Brazil, China, India, Indonesia, Mexico, Russia and Turkey

FIRST-HALF 2012 HIGHLIGHTS

Commercial offer

bioMérieux brought six new products to market in the first half of 2012, including:

  • VIDAS® ANTI-HCV, a test for the diagnosis of hepatitis C. Hepatitis C (HCV) is a virus that causes a serious inflammation of the liver. 130 to 200 million people worldwide suffer from chronic hepatitis C. This test completes the VIDAS® menu for A, B and C viral hepatitis.
  • The third version of the Myla® middleware, which is part of the Full Microbiology Lab Automation (FMLA®) range. Myla helps to optimize microbiology laboratory workflows and consolidate data, converting them into quickly actionable information for treatment decisions. This third version offers important new features for clinical laboratories, especially for blood culture testing. It may also be used in industrial applications.
  • For industrial applications, a specialized version of the VITEK® MS mass spectrometry solution for the identification of bacteria and yeast. Compliant with the traceability standards in Title 21 CFR Part 11 of the American Code of Federal Regulations, the solution includes a dedicated database developed by bioMérieux. It is primarily intended for large pharmaceutical laboratories.

In addition, in clinical applications, bioMérieux pursued the process of obtaining FDA clearance to commercialize the VITEK® MS mass spectrometry solution in North America. bioMérieux will file for the corresponding 510(k) dossier before year-end.

Last, the U.S. FDA authorized the sale of the new antibiotic susceptibility test Piperacillin/Tazobactam (TZP) on VITEK® 2. bioMérieux has also obtained validation from the French Agency for Food, Environmental and Occupational Health and Safety (ANSES, based in Maisons-Alfort) for the ADIAVET™ Schmallenberg virus PCR kit for the detection of the Schmallenberg virus, responsible for an epidemic currently affecting a large number of livestock farms in Europe.

Innovation

  • Platforms under development

As part of its 2012 - 2015 roadmap, the Company has decided to anchor its growth even more fully in the launch of innovative solutions. In particular, it intends to bring five new platforms to market, each one contributing to improve the medical value of diagnostics, testing processes or laboratory workflow.

- In immunoassays, the new generation VIDAS® instrument will be presented to clinical laboratories during the Journées Internationales de Biologie congress next November in Paris.

- In clinical microbiology, the new automated blood culture system and the incubator incorporating imaging technologies will be brought to market in 2013. This is a particularly important launch for bioMérieux. The two systems meet the automation needs of laboratories. They will help to optimize workflows, enabling technicians to focus on high value-added tasks, while facilitating faster, more reliable clinical decisions to improve patient care.

- In molecular biology, the system under development with the company Biocartis, expected to be launched in 2014, will be able to perform complex tests and integrate all the steps of a molecular assay in a scalable platform.

- In the field of automated point-of-care, bioMérieux and Philips continue their collaboration to create a handheld solution for hospitals. The next technical and analytical milestone is scheduled at the end of this year.

  • Personalized medicine and theranostics

- At the end of July, bioMérieux filed for U.S. FDA Pre-Market Approval (PMA) for a molecular theranostic test to detect BRAF V600 (V600E and V600K) gene mutations found in several cancers, including melanoma. This test will be used to assist oncologists in choosing the appropriate treatment for patients with metastatic melanoma. Its development follows the collaboration agreement signed by bioMérieux and GSK in May 2010.

- bioTheranostics announced new advances at the 2012 American Society of Clinical Oncology (ASCO) Annual Meeting in June. It presented a prospective study showing significant improvement in the overall survival of patients with cancers of unknown origin and whose oncologic treatment is driven by the results of the CancerTYPE ID® test. It also announced that it has expanded the biomarker profiles used in its PRECISSM product line, which helps to predict and track how metastatic tumors respond to treatment.

Operational advances

  • Integration of AES Laboratoire and ARGENE
    The process of integrating AES Laboratoire and ARGENE proceeded on schedule during the first half:

- Integrating AES Laboratoire is a priority for 2012. The sales teams of bioMérieux and of the five AES Laboratoire companies are now fully coordinated and, in the Industry Department, a new organization is being deployed.

- ARGENE products are now being commercialized by more than 20 bioMérieux subsidiaries and have been shipped from the International Distribution Center (IDC) since June. The transfer of the production of two ARGENE products to the Grenoble site is ongoing. The validation batches have been produced on schedule.

  • New commercial subsidiary in Malaysia
    The international sales network was strengthened with the creation of bioMérieux’s 40th commercial subsidiary. Based in Malaysia, the new unit is in charge of sales, promotion and maintenance of Group products in the local market.
  • End of production at the Basingstoke plant
    As part of the ongoing plan to optimize the manufacturing base, production of culture media at the Basingstoke, UK plant will be terminated in 2013. The leased facility employs eight people.
  • Deployment of the Global ERP system
    During the first half, the Global ERP was successfully deployed in Poland, Switzerland and Argentina. Projects carried out during the first half also supported its early July roll-out in Austria, Hungary, Czech Republic and Chile, bringing to twelve the number of countries where the Global ERP has been implemented.

FINANCIAL RESULTS

Sales*

Net sales for the first six months of 2012 amounted to €750 million, up 11.4% as reported. This represented a year-on-year increase of 8.7% at constant exchange rates and of 2.9% at constant exchange rates and comparable business base (primarily excluding the acquisitions of AES Laboratoire and ARGENE in July 2011 and the divestiture of Dima Diagnostika in early 2012).

Analysis of Sales

In € millions

     

In %

 
Sales - Six Months Ended June 30, 2011 673
Currency Effect +18 +2.7%  
Organic Growth (at constant exchange rates and comparable business base) +19 +2.9% +8.7%
Change in Business Base +40 +5.8%
Sales - Six Months Ended June 30, 2012 750 +11.4%

Sales varied by region during the period. Market conditions were difficult in Southern Europe (11%** of consolidated sales), where governments are trying to cut their public deficits, and in France (11%** of consolidated sales), where clinical laboratories are continuing to consolidate. Sales in North America (22% of consolidated sales) were stable, reflecting high prior-year comparatives and low consumption of reagents for clinical applications. Demand continued on an upward trend in emerging markets (27% of consolidated sales), with in particular the Emerging 7 reporting organic growth of nearly 24%. bioMérieux China became the Group’s third largest company, with organic growth of 48%.

Sales

by Region

In € millions

  Six Months Ended
June 30, 2012
  Six Months Ended
June 30, 2011
  % Change
As Reported
 

% Change
At constant
exch. rates
& comparable
business base

Europe(1) 395 359 +10.1% 0.0%
North America 167 155 +7.7% -0.4%
Asia-Pacific 126 99 +26.9% +17.5%
Latin America 62 60 +3.9% +4.2%
TOTAL 750 673 +11.4% +2.9%

(1) Including the Middle East and Africa

Industrial applications turned in a solid performance, with 8.2%, organic growth, and now account for 20% of consolidated sales. Sales of clinical applications increased by 1.9% over the period. After the strong sales reported in 2011, microbiology ended the period up 3.5% on an organic basis.

Sales

by Technology

In € millions

  Six Months Ended
June 30, 2012
  Six Months Ended
June 30, 2011
  % Change
As Reported
 

% Change
At constant
exch. rates
& comparable
business base

Clinical Applications 597 568 +5.1% +1.9%
Microbiology 379 353 +7.3% +3.5%
Immunoassays 176 175 +0.6% +0.3%
Molecular Biology 34 32 +9.1% -8.7%
Other Lines 8 8 -5.9% +3.9%
Industrial Applications 153 105 +45.3% +8.2%
TOTAL 750 673 +11.4% +2.9%

* The full first-half 2012 business review may be found at www.biomerieux-finance.com
** Excluding AES Laboratoire and ARGENE

Consolidated income statement

  • Gross profit amounted to €393 million in first-half 2012, an 8.3% increase from the €363 million reported in the year-earlier period. The improvement was led by the organic and external growth in sales, and by the favorable currency effect. On the downside, acquisition accounting entries concerning AES Laboratoire and ARGENE represented a €3.2-million expense. Expressed in sales percentage, gross margin narrowed by 1.5 point to 52.4%, primarily as a result of the currency effect and changes in the scope of consolidation.
  • Operating income before non-recurring items* rose by 6.5% (+ €8 million) to €128 million from €120 million in first-half 2011. It represented 17% of sales or 17.9%, excluding the impact of exchange rates on sales and the acquisition accounting entries concerning AES Laboratoire and ARGENE.
    • Selling, general and administrative expenses amounted to €198 million. Reflecting strict operating cost discipline, they represented 26.4% of sales, a 0.6 point improvement despite the faster deployment of the Global ERP system.
    • Research and development expenses rose by 7.4% at constant exchange rates to €79 million, or 10.5% of sales, from €72 million in first-half 2011.
    • R&D tax credits recognized during the period amounted to €8.5 million versus €6.6 million in first-half 2011.
  • Lifted by the growth in operating income before non-recurring items, operating income rose by 5% to €125 million. It includes €3.1 million in non-recurring items, versus €1.3 million in first-half 2011.
  • Net financial expense amounted to €4.8 million, up €2 million for the period due to the increase in net debt following the acquisitions of AES Laboratoire and ARGENE in July 2011.
  • Income tax expense stood at €40 million or 33.4% of pretax income, versus 35.4% in first-half 2011. The improvement notably reflected the lesser impact from loss-making companies.
  • As a result, net income ended the period up 6.5% at €80 million, or 10.6% of sales, versus €75 million in first-half 2011. Earnings per share came in at €2.01 versus €1.88 in the year-earlier period.

Consolidated cash flow statement

  • EBITDA** climbed to €172 million from €159 million in first-half 2011, led by the €8 million growth in operating income before non-recurring items and the €5 million increase in operating depreciation and amortization.
  • Operating working capital requirement rose by €11 million over the period, which was much less than the €48 million increase in first-half 2011. At constant scope of consolidation, it represented 24.6% of sales, versus 25.4% in the year-earlier period, reflecting the sharp decline in trade receivables. In particular, the one-time payment of €28.5 million from Spanish provinces in late June settled almost all of the pre-2012 public hospital receivables. As a result, bioMérieux’s net receivables due from Greek, Portuguese, Spanish and Italian public-sector customers totaled €79 million at June 30, 2012, compared with €100 million at December 31, 2011. Average days sales outstanding were down by eight days as of June 30, 2012, at constant exchange rates and scope of consolidation.
  • Capital expenditure outlays reached €54 million, compared with €45 million in first-half 2011, including €38 million in industrial capital expenditure versus €30 million in the year-earlier period. Industrial capital expenditure primarily concerned the new Global ERP system, as well as the ongoing upgrade and extension projects at the Group’s main production facilities.
  • Based on the above, free cash flow before dividends, acquisitions and divestments stood at €69 million for the period, versus €36 million in first-half 2011.
  • In June 2012, the Company paid a dividend of €0.98 per share, for an aggregate payout of €38.7 million, unchanged from 2011.
  • During the first half, the Company received payment for the Dima Diagnostika divestiture.
  • Based on the above, net debt amounted to €94 million at June 30, 2012, compared with €131 million at December 31, 2011. It is financed mainly by commercial paper, backed by the €350 million syndicated revolving line of credit that the Company implemented in April 2012.

* Operating income before “significant, extraordinary and non-recurring items”, which are included in “other non-recurring operating income and expenses”
** Operating income before non-recurring items, depreciation and amortization

Other financial highlights

  • The installed base at June 30, 2012 reached approximately 66,300 instruments, an increase of 1,500 new instruments over the period.

Human resources

  • The Company had 7,105 full-time-equivalent employees as of June 30, 2012. There were 7,014 full-time-equivalent employees as of December 31, 2011.

SUBSEQUENT EVENT

In late July 2012, bioMérieux acquired a 60% interest in India’s RAS Lifesciences Pvt. Ltd (RAS) for €1.6 million. Based in Hyderabad, RAS is a privately held start-up specialized in molecular diagnostics and does not yet have significant sales. The commercialization of its product range is beginning in specialized laboratories. Its offering is comprised of 26 reagents developed, produced and approved for sale in India. RAS’s expertise, service laboratory and range of reagents, which are intended primarily for the diagnosis of infectious diseases, will enable bioMérieux to commercialize a menu of molecular diagnostic tests primarily in India and, over the medium term, in emerging markets.

2012 OBJECTIVES

In 2012, bioMérieux expects to see sales growth of between 3% and 5% for the year, at constant exchange rates and comparable business base. Until July 2012, this objective excludes the impact of external growth operations, which should add around 3% in growth.

In addition, bioMérieux confirms its full-year objective for operating income before non-recurring items of between €255 million and €270 million.

INVESTOR CALENDAR

Third-quarter 2012 sales: October 23, 2012, after close of trading
Investor Day: January 23, 2013

The above forward-looking statements are based, entirely or partially, on assessments or judgments that may change or be modified, due to uncertainties and risks related to the Company's economic, financial, regulatory and competitive environment, notably those described in the 2011 Registration Document. Accordingly, the Company cannot give any assurance nor make any representation as to whether the objectives will be met. The Company does not undertake to update or otherwise revise any forecasts or objectives presented herein, except in compliance with the disclosure obligations applicable to companies whose shares are listed on a stock exchange.

ABOUT BIOMERIEUX

Advancing Diagnostics to Improve Public Health
A world leader in the field of in vitro diagnostics for over 45 years, bioMérieux is present in more than 150 countries through 40 subsidiaries and a large network of distributors. In 2011, revenues reached €1,427 million with 87% of sales outside of France.
bioMérieux provides diagnostic solutions (reagents, instruments, software) which determine the source of disease and contamination to improve patient health and ensure consumer safety. Its products are used for diagnosing infectious diseases and providing high medical value results for cancer screening and monitoring and cardiovascular emergencies. They are also used for detecting microorganisms in agri-food, pharmaceutical and cosmetic products.
bioMérieux is listed on the NYSE Euronext Paris market (Symbol: BIM – ISIN: FR0010096479).
Corporate website: www.biomerieux.com. Investor website: www.biomerieux-finance.com.

bioMérieux
CONSOLIDATED INCOME STATEMENT
   
In millions of euros Jan 12 - Jun 12 Jan 11 - Dec 11 Jan 11 - Jun 11
6 months 12 months 6 months
       
Net Sales 750,4 1 427,2 673,4
Cost of sales -357,3 -666,1 -310,6
Gross profit 393,1 761,1 362,8
Other operating income 11,4 20,7 11,1
Selling and marketing expenses -144,0 -264,5 -125,6
General and administrative expenses -54,0 -107,6 -56,7
Research and development expenses -78,9 -152,1 -71,8
Total operating expenses -276,9 -524,2 -254,1
Operating income before non-recurring items 127,6 257,6 119,8
Other non-recurring income (expenses) -3,1 -12,2 -1,3
Operating income 124,5 245,3 118,5
Cost of net financial debt -3,8 -4,4 -1,9
Other financial items -1,0 -3,3 -0,9
Income tax -40,0 -77,2 -41,0
Net income of consolidated companies 79,6 160,5 74,7
Attributable to the minority interests 0,5 2,3 0,6
Attributable to the parent company 79,1 158,2 74,1
       
Basic net income per share 2,01 € 4,01€ 1,88 €
Diluted net income per share 2,01 € 4,01€ 1,88 €
bioMérieux
CONSOLIDATED BALANCE SHEET
  ASSETS   NET   NET   NET
In millions of euros 06/30/2012 12/31/2011 06/30/2011
NON-CURRENT ASSETS
. Intangible assets 186,5 184,4 116,3
. Goodwill 334,3 334,3 182,1
. Property, plant and equipment 366,3 367,0 330,2
. Financial assets 25,2 26,9 28,0
. Other non-current assets 31,0 31,5 26,1
. Deferred tax assets 23,9 28,2 20,3
TOTAL 967,3 972,2 703,0
 
CURRENT ASSETS
. Inventories and work in progress 240,3 217,1 195,5
. Accounts receivable 420,4 447,1 400,9
. Other operating receivables 69,2 50,4 56,3
. Tax receivable 11,4 19,6 18,6
. Non-operating receivables 1,3 1,0 1,3
. Cash and cash equivalents 85,6 42,7 82,4
TOTAL 828,2 777,9 755,1
. Assets held for sale 12,0 12,0 12,0
TOTAL ASSETS 1 807,5 1 762,2 1 470,1
 
LIABILITIES AND SHAREHOLDERS' EQUITY 06/30/2012 12/31/2011 06/30/2011
SHAREHOLDERS' EQUITY
. Share capital 12,0 12,0 12,0
. Additional paid-in capital & Reserves 1 058,1 925,1 897,7
. Net income for the year 79,1 158,2 74,1
TOTAL EQUITY BEFORE MINORITY INTERESTS 1 149,3 1 095,4 983,8
MINORITY INTERESTS 8,5 8,1 4,8
TOTAL SHAREHOLDERS' EQUITY 1 157,8 1 103,4 988,6
NON-CURRENT LIABILITIES
. Net financial debt - long-term 13,5 12,6 9,3
. Deferred tax liabilities 38,0 41,2 28,9
. Provisions 40,3 33,2 30,5
TOTAL 91,8 87,0 68,7
CURRENT LIABILITIES
. Net financial debt - short-term 165,9 161,3 53,2
. Provisions 10,7 14,0 11,4
. Accounts payable 134,7 142,6 120,9
. Other operating liabilities 206,8 198,9 189,3
. Tax liabilities 23,7 27,3 25,6
. Non-operating liabilities 16,1 27,7 12,3
TOTAL 557,9 571,8 412,7
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1 807,5 1 762,2 1 470,1
bioMérieux
CONSOLIDATED CASH FLOW STATEMENT
In millions of euros   Jan 12
Jun 12
  Jan 11 Dec 11   Jan 11
Jun 11
  6 months   12 months   6 months
Net income of consolidated companies 79,6 160,5 74,7
Non-recurring items 3,1 12,2 1,3
Cost of net financial debt 3,8 4,4 1,9
Other financial items 1,0 3,3 0,9
Current income tax expense 40,0 77,2 41,0
Operating income 127,6 257,4 119,8
Operating depreciation and provisions on assets 44,6 85,3 39,7
EBITDA (before non-recurring items)   172,1   342,7   159,5
 
Income tax paid   -35,1   -65,7   -34,3
Increase in inventories -21,4 -18,5 -21,1
Change in requirements in accounts receivable 30,7 -29,2 -13,9
Decrease in accounts payable -9,0 -0,1 -4,7
Change in other operating working capital -11,6 -1,9 -8,5
Increase in operating working capital   -11,3   -49,7   -48,2
 
Other non current operating gains/losses
(w/o exceptionnal depreciations and capital gains/losses)
-0,5 -11,2 -1,4
Operating provisions for contingencies 2,6 -0,7 -1,6
Share-based payments -2,1 2,0 5,5
Other financial items
(w/o accruals & disposal of financial assets)
-0,7 -0,2 0,1
Change in fair value of financial instruments -0,3 0,3 0,5
Other non operating working capital -4,9 1,7 1,7
Change in non-current assets 1,3 -2,5 -0,2
Other cashflow from operations -4,6 -10,6 4,6
             
Net cash flow from operations   121,1   216,6   81,6
 
Purchase of property, plant and equipment -53,6 -102,1 -45,3
Proceeds on fixed asset disposals 4,1 6,7 2,3
Purchase of financial assets / Disposals of financial assets 0,3 -3,7 1,1
Impact of changes in the scope of consolidation 3,5 -226,1 0,0
             
Net cash flow from (used in) investment activities   -45,7   -325,2   -41,9
 
Purchases and proceeds of treasury stocks 0,4 -2,8 -2,0
Dividends to shareholders -38,7 -38,7 -38,7
Cost of net financial debt -3,8 -4,4 -1,9
Change in confirmed financial debt 38,7 102,1 -0,2
             
Net cash flow from (used in) financing activities   -3,3   56,2   -42,8
             
NET CHANGE IN CASH AND CASH EQUIVALENTS   72,1   -52,4   -3,1
             
ANALYSIS OF NET CHANGE IN CASH AND CASH EQUIVALENTS
Net cash and cash equivalents at the beginning of the year -19,2 34,0 34,0
Impact of currency changes on net cash and cash equivalents 4,1 -0,9 -1,6
Net change in cash and cash equivalents   72,1   -52,4   -3,1
Net cash and cash equivalents at the end of the year   57,0   -19,2   29,3

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