Q1 report january - march 2000

Q1 REPORT JANUARY - MARCH 2000 * Orders received totalled SEK 1,266.4 million (1,250.3) * Invoiced sales totalled SEK 1,167.9 million (1,183.1) * The operating profit was SEK 152.0 million (177.4) * The profit before tax was SEK 135.6 million (161.1) * Good orders received figure for the Infection Control business area Market developments Orders received and invoiced sales for the Group in Q1 are at the same level as last year. Demand in the Infection Control business area has been good particularly in the important North American market. The business area's orders received rose by 10%. In the Geriatrics business area orders received declined. Adjusted for a major order from the US's largest geriatric care chain, Geriatrics' orders received are at the same level as last year. Results The Group's profit before tax for Q1 was SEK 135.6 million compared with SEK 161.1 million for the same period last year. The profit slide is attributable to the Geriatrics business area's lower net sales. The Infection Control business area's profit is at the same level as last year. Outlook for 2000 The good level of demand coupled with the Sterilisation product line's improved competitiveness, means that the Infection Control business area's profit is expected to improve over the coming year. The demand for Geriatrics business area is difficult to judge. In view of present market conditions the business area's result is expected to be at the same level as last year. Infection Control business area Market developments Orders received Q1 2000 Q1 1999 Change Adj. f. corp.acq's and curr. fluct's Western Europé 323,6 321,1 0,8% USA 292,3 269,6 8,4% Asia/Australia 60,7 43,2 40,5% Rest of the world 59,3 28,9 105,2% Business area total 735,9 662,8 11,0% 10,2% The level of demand for the business area's products has continued to progress well. Above all demand from customers in the Health care and Geriatric care segments has been good while demand from Industrial customers was weak. The business area's best performance has been on the important North American market. On the European markets demand has been stable. The developing markets, mainly Asia and Latin America, saw good growth while other developing markets saw lower growth. Taken together, orders received for Q1 have risen by 10% compared with the same period last year, which compares with the business area's long-term growth objective of 5 - 7%. Results Q1 2000 Q1 1999 Change Adj. f. 12 months corp.acq's1999 and curr. fluct's Net sales, SEK 652,5 619,3 5,4% 4,6% 2 811,1 Million Gross profit 257,4 242,1 6,3% 1 108,7 Gross margin, % 39,4% 39,1% 0,3% 39,4% Operating cost, -188,6 -174,2 8,3% -743,3 SEKMill Operating profit68,8 67,9 1,3% 365,4 Operating 10,5% 11,0% -0,5% 13,0% margin, % Lower usage of manufacturing facilities for sterilisers for the pharmaceutical industry was offset by improved results from the North American activities, which means a profit at the same level as last year. Important activities Development of a new generation of Health Care sterilisers based on a common platform is continuing according to plan. The product suite will be launched in the late autumn. The project's costs of around SEK 20 million will be charged to this year's accounts and from 2002 will generate savings of around SEK 50-60 million per year. During Q1 the business area continued to evaluate the possibilities of further integrating the customer chain and running sterile centres in co- operation with service providers and hospitals. The evaluation will continue over the next 12-month period. During the quarter a new range of surgical lamps was launched, based on revolutionary fibre-optic technology. The global market for surgical lamps is worth around SEK 1.5 billion of which SEK 600 million is in the US. There is huge potential available for taking significant market share. A new operating table was launched which is more competitive and has a wide area of use. Both products are expected to be available on the market during Q4 2000. Product lines Sterilisation Q1 2000 Q1 1999 Change Adj. f. 12 months corp.acq's1999 and curr. fluct's Orders received 524,5 443,3 18,3% 16,4% 1 942,6 Net sales 438,5 418,3 4,8% 3,3% 1 902,7 Disinfection Q1 2000 Q1 1999 Change Adj. f. 12 months corp.acq's1999 and curr. fluct's Orders received 211,4 219,5 -3,7% -2,4% 941,9 Net sales 214,0 201,0 6,5% 7,2% 908,4 Outlook The conditions for the coming year as a whole are seen as good. However, some uncertainty still surrounds demand from customers in the pharmaceutical industry. The market has stabilised in the US at the same time as demand from the developing markets has increased.. Geriatrics business area Market developments Orders received Q1 2000 Q1 1999 Change Adj. f. corp.acq's and curr. fluct's USA 144,7 202,8 -28,6% Great Britain 155,7 165,6 -6,0% Germany 59,8 57,4 4,2% Other Western 104,3 102,1 2,2% Europe Rest of the 49,5 43,2 14,6% world Business area 514,0 571,1 -10,0% -12,1% total Demand has basically followed the same pattern as in 1999 with two exceptions: the US and the UK. Orders received for the US activities during Q1 1999 included an order of around SEK 60 million from Beverly Enterprises, one of the US's largest geriatric care chains. If this order is excluded from the comparison with 1999's figures, the current quarter's orders received from the US are at the same level as Q1 1999 and 1998. It can also be confirmed that the UK market developed more weakly than last year especially within both the pressure sore and lifting aids sectors. This is due to a change in buying patterns, as buying by health authorities has now been spread out over the year. Demand on the important markets in Germany, Canada and the Netherlands has been better than expected and on other markets demand has been generally good. Results Q1 2000 Q1 1999 Change Adj. f. 12 months corp.acq's1999 and curr. fluct's Net sales, SEK 498,2 547,0 -8,9% -11,2% 2 007,7 Million Gross profit 256,5 295,7 -13,3% 1 051,9 Gross margin, % 51,5% 54,1% -2,6% 52,4% Operating cost, -175,5 -187,9 -6,6% -731,6 SEKMill Operating profit81,0 107,8 -24,9% 320,3 Operating 16,3% 19,7% -3,4% 16,0% margin, % The decline in the results is completely attributable to the lower business volumes in the US and the UK. Important activities The Encore patient lift that was launched last year has continued to sell well. The cost rationalisation program, started in the US in Q4 last year, has in principle been concluded and will generate annual savings of around SEK 20 million. The UK pressure sore business' marketing organisation has been re-focused and made more effective, which will mean annual savings of SEK 4 - 5 million. The implementation of a joint marketing organisation for the European sales companies aimed at underpinning the business area's unique competitive edge as a supplier of complete system solutions, is proceeding according to plan. The new organisation will furthermore eventually lead to lower distribution and administrative costs. Product lines Hygiene Systems Q1 2000 Q1 1999 Change Adj. f. 12 months corp.acq's1999 and curr. fluct's Orders received 208,0 203,0 2,5% 1,8% 790,3 Net sales 188,7 196,6 -4,0% -4,9% 814,4 Patient HandlingQ1 2000 Q1 1999 Change Adj. f. 12 months corp.acq's1999 and curr. fluct's Orders received 191,2 240,7 -20,6% -22,5% 745,1 Net sales 193,8 225,0 -13,9% -16,0% 749,1 Antidecubitus Q1 2000 Q1 1999 Change Adj. f. 12 months corp.acq's1999 and curr. fluct's Orders received 114,8 127,4 -9,9% -14,4% 446,2 Net sales 115,7 125,4 -7,7% -12,4% 444,2 Outlook Demand in the US continues to be difficult to judge. A decision has been taken by the US Congress to postpone additional funds for the Medicare system. The effects of the decision on the year's results are difficult to see, although they are probably positive. On the UK market the business area expects that demand for lifting aids will climb during the rest of the year, while the pressure sore business will probably be somewhat worse than last year. The business area's costs will be lower during the year due to the restructuring programme that has been introduced. A large number of new products have also been launched over the past two quarters. Other The independent Medical product line that includes the companies LIC Audio and NeuroMédica reported net sales of SEK 17.1 million (17.0). Next report The next report from the Getinge Group (Interim report for first six months) will be published on 10 August 2000. Getinge 26 april 2000 Johan Malmquist President and CEO, Tel no. +46 - 35 15 55 00 Income Statement - the Getinge Industrier Group SEK Million Q1 Q1 Change 12 Months 2000 1999 1999 1) Net sales 1 167,9 1 183,1 -1,3% 4 884,7 Cost of goods sold -648,6 -639,7 1,4% -2 702,8 and services Gross profit 519,3 543,4 -4,4% 2 181,9 Gross margin 44,5% 45,9% -1,4% 44,7% Costs for sales, research/ development and -367,3 -366,0 0,4% -1 489,7 administration 2) Operating profit 152,0 177,4 -14,3% 692,2 Operating margin 13,0% 15,0% -2,0% 14,2% Interest income 4,4 4,6 25,9 Interest expense -22,4 -20,1 -77,6 Other financial items 1,6 -0,5 -3,3 Associated companies' 0,0 -0,3 -1,0 profit/loss Profit before tax 135,6 161,1 -15,8% 636,2 3) Tax -33,9 -40,2 -158,5 Net profit 101,7 120,9 -15,9% 477,7 1) Adjusted for currency fluctuations and company acquisitions the net sales' -2,7% change is 2) Operating profit is charged with - amortisation on -15,1 -14,7 -60,7 goodwill - depr. on other -32,4 -31,3 -127,5 fixed assets -47,5 -46,0 -188,2 3) For Q1 2000 tax is estimated at 25% of the profit before tax. For 1999 the Group's full tax cost was 24.9% of the profit before tax. Summarised Balance Sheet - the Getinge Industrier Group SEK Million 31 March 31 March 31 Dec 1999 2000 1999 Assets Goodwill 1 001,4 1 041,3 1 012,7 Fixed assets 816,1 716,4 815,6 Stock-in-trade 868,1 837,6 765,3 Receivables 1 546,0 1 591,7 1 625,1 Liquid assets 211,4 245,2 158,8 Total assets 4 442,9 4 432,2 4 377,5 Shareholders' equity & Liabilities Shareholders' equity 1 656,9 1 332,3 1 560,8 Interest bearing 1 704,3 1 864,9 1 673,7 liabilities Non-interest bearing 1 081,7 1 235,0 1 143,0 liabilities Total Equity & 4 442,9 4 432,2 4 377,5 Liabilities Cash flow analysis - the Getinge Industrier Group [REMOVED GRAPHICS] Key figures - the Getinge Industrier Group Q1 2000 Q1 1999 Change 1999 Orders received, SEK Million 1 266,4 1 250,3 1,3% 4 932,2 Orders received, adj. for -0,1% curr.fluctuations and corp.acq's Net sales, SEK Million 1 167,9 1 183,1 -1,3% 4 884,7 Net sales, adj. for -2,7% curr.fluctuations and corp.acq's Financial net -16,4 -16,0 2,5% -55,0 Profit before tax, SEK Million 135,6 161,1 -15,8% 636,2 Net profit SEK Million 101,7 120,9 -15,8% 477,7 Earnings per share after full 2,24 2,66 -15,8% 10,52 tax, SEK Return on capital employed, per 22,0% 25,5% -3,5% 23,2% cent Equity/assets ratio, per cent 37,3% 30,1% 7,2% 35,7% Equity per share, SEK 36,48 29,33 24,4% 34,36 Operating cash flow, SEK Million42,4 148,6 437,1 Direct net investments in machinery, equipment and buildings 22,4 51,5 167,4 Number of employees at the 3 800 3 765 3 812 period's end This report has not been subject to an official audit ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/04/28/20000428BIT00800/bit0001.doc http://www.bit.se/bitonline/2000/04/28/20000428BIT00800/bit0002.pdf