(new: share price updated, statements by management from press conference on customer behavior and Polyplus acquisition)

GÖTTINGEN (dpa-AFX) - Inventory adjustments by customers and the extensive discontinuation of the corona business weighed heavily on pharmaceutical and laboratory equipment supplier Sartorius in the first quarter. In addition, higher costs resulted in lower profitability. Sartorius's performance was weaker than analysts had expected. However, Group CEO Joachim Kreuzburg assumes that the normalization effects will no longer play a significant role in the second half, as was stated during the presentation of figures on Thursday in Goettingen. He therefore confirmed the annual targets for 2023. The share price nevertheless slumped.

In the afternoon, the share continued its downward trend since February, falling by more than 11 percent to just over 342 euros. In the process, it also dragged down the shares of Merck KGaA and the dialysis provider FMC.

Sartorius' first-quarter order intake, adjusted for foreign exchange, fell almost a third to 765 million euros. In an initial reaction, JPMorgan analyst Richard Vosser particularly negatively assessed the surprisingly sluggish demand in the Bioprocess Solutions (BPS) division. Here, the Group also offers technologies for the production of biopharmaceuticals as well as vaccines. It accounts for the bulk of Sartorius business. According to Vosser, the weak order intake in this segment is causing uncertainty with regard to business development in 2023, which even the confirmation of the annual targets will not change.

Sartorius CEO Kreuzburg reported in a conference call with journalists that even major customers were ordering less at the moment, in some cases not at all. Many companies had stocked up in recent months because of supply chain problems; now, inventories are being reduced, and this is exactly what Sartorius is feeling.

Industry experts had not expected Sartorius to be hit so hard in the opening quarter. In Kreuzburg's opinion, however, the quarterly results were within the range of his expectations. According to him, this is also supported by the confirmed forecast for the year. Instead, he attributed the reaction on the stock market to the fact that Sartorius traditionally presents figures relatively early in the reporting season and often gets the first surprise. Investors are then already prepared for the prevailing conditions in the industry, so that the competition in Sartorius' "slipstream" may be less affected.

The slide in Sartorius' share price has wiped out the gains made in the first weeks of the year. The share price has come a long way from its former highs of over 600 euros towards the end of 2021, when the pandemic caused a special boom at Sartorius. Investors who have invested since then have to record a discount of around 45 percent.

In terms of sales revenue, the Goettingen-based company achieved a total of 903 million euros in the first quarter, 13 percent less than a year earlier. Excluding the corona business, the decline was in the mid single-digit percentage range, it said.

Earnings before interest, taxes, depreciation and amortization (adjusted Ebitda) adjusted for special items reached 272 million euros, 22 percent below the prior-year figure. The corresponding margin was 30.1 after 34.1 percent. At the bottom line, Sartorius earned 93 million euros, even less than half of the previous year's figure.

For 2023, the Executive Board continues to anticipate a reduced growth rate. On the basis of constant exchange rates, sales revenue is expected to increase in the low single-digit percentage range. Excluding the corona-related business, sales revenue is expected to increase in the upper single-digit percentage range.

Last year, Sartorius had still posted double-digit percentage growth. At the same time, management expects to generate almost no more sales revenue from corona-related business in the current year. About one percentage point of growth is expected to come from acquisitions.

The operating margin for earnings before interest, taxes, depreciation and amortization (adjusted Ebitda), adjusted for special effects, is expected to be at the level of the previous year in 2023, when it reached 33.8 percent.

In the course of the year, Sartorius will then close the acquisition of Polyplus. At 2.4 billion euros, the acquisition of the French company is considered the largest in the company's history. According to Kreuzburg, it is still unclear what contribution to earnings can be expected from this acquisition, and therefore also whether the annual forecast will be adjusted.

The manager sees long-term instruments such as bonds as a possibility for financing the takeover, but did not rule out a capital increase at Sartorius Stedim. The shares of the biotechnology subsidiary are listed on the French stock exchange./lew/knd/mis