Eurofins Scientific Se · EURONEXT:ERF
Eurofins Scientific — FY2013 Earnings Presentation
48 slides from Eurofins Scientific's earnings presentation, Mar 3, 2014
Slide 1: Eurofins Corporate Presentation Full Year 2013 Results
Eurofins A global leader in bioanalytical testing in the food, environment and pharmaceutical sectors Corporate Presentation Full Year 2013 Results 03 March, 2014 www.eurofins.com
Slide 2: Disclaimer
Disclaimer The statements made during this presentation or as response to questions during the Question & Answers period that are not historical facts are forward looking statements. Furthermore, estimates and judgements may be made based on market and competitive information available at a certain
Slide 3: Contents
Contents Introduction Market & Strategic Positioning Finance & Outlook Summary Appendix FY 2013.ppt 1-C-IR-PRE-01186478 BPAN 26.02.2014 3
Slide 4: Eurofins' Mission is to contribute to global Health, Safety & Environment
Eurofins‟ Mission is to contribute to global Health, Safety & Environment with the best in bioanalysis Eurofins provides testing Founded in 1987 services in three main areas that have a strong impact on IPO in 1997 in Paris at EUR 1.83 per share human health: Network of more than 190 laborator
Slide 5: Leading global and local market positions
Leading global and local market positions N°1* N°1 to N°3* N°1* 10% worldwide worldwide worldwide Food & Testing for Feed Pharma/ Environment Testing Biotech Testing 5% Market size ~ EUR 1.5 - 2.0bn ~ EUR 5bn ~ EUR 4bn estimate Eurofins N° 1 in Europe N° 1 Worldwide in Pharma N° 1 in Europe ranking
Slide 6: Drivers for long-term market growth
Drivers for long-term market growth Secular Underlying Fundamentals General Market Drivers Laboratory Market Drivers Consumer Demand for safe Increasing wealth expectations for pharmaceuticals, quality food and quality of Life protection and clean environment Consolidation of the fragmented laborato
Slide 7: Eurofins is set to reinforce its global market leadership
Eurofins is set to reinforce its global market leadership Eurofins Growth Cycles 2004 - 2005 Reaping the Benefits 2,000 End of investment cycle >20% Group Adjusted 22% 1 Consolidation 2 EBITDA ma rgin objective (2006-2010) 20.5% (2000-2004) 18.7% EBITDA Margin 19.8% Entry in 11 new <markets 21.6% RO
Slide 8: 2013: Results Above Objectives
2013: Results Above Objectives A strong start to Eurofins‟ 5-Year Plan Eurofins 5 year Report Card: 2008-2013 CAGR 2013: successful start of our 5 - year plan Revenues of EUR 1,226m vs EUR 1,200m objective Total revenue growth of 17.4% 2010-2013 Revenue CAGR 21.7% 2011 21.8% 2012 26.0% Over 6.
Slide 9: An international network of world class, standardised laboratories
An international network of world class, standardised laboratories is attractive for our customers 2013 revenue split : N. America 22.5% France 17.9% Germany 17.3% Others 14.8% Nordic Region 13.0% Benelux 9.3% UK & Ireland 5.2% Entry into high-growth markets with start ups & acquisitions 80% of the
Slide 10: Geared towards strong economies and fast-growing markets
Geared towards strong economies and fast-growing markets Share of Eurofins revenues in various markets in 2013 Germany Benelux Germany USA Germany UK Total France Italy Spain TOTAL Austria Nordics + + Northern Europe Excluding Portugal Switzerland (Northern Northern AP & EM USA France & Europe) Euro
Slide 11: Strategy aims at building long lasting competitive advantages
Eurofins‟ strategy aims at building long lasting competitive advantages Leading technology Quality of customer service Competence Centres & R&D activities Extensive expertise in local regulations for all major markets, and one-stop contact for Proprietary technologies for proof of compliance i
Slide 12: Contents
Contents Introduction Market & Strategic Positioning Finance & Outlook Summary Appendix FY 2013.ppt 1-C-IR-PRE-01186478 BPAN 26.02.2014 12
Slide 13: The Food testing market has robust growth drivers
The Food testing market has robust growth drivers Food scares and Globalisation: Raw Consumers‟ Outsourcing of crises, widely materials sourced increasing awareness industry‟s covered in the from countries and demand for safe internal or state- media with different QC and high quality food owned pra
Slide 14: Food & Feed testing offering is the most comprehensive in the market
Eurofins‟ Food & Feed testing offering is the most comprehensive in the market Agricultural production, product Production Retail & Distribution development Microbiology Sensorial Dioxins Veterinary drug Vitamins Quality Control residues Authenticity Pesticides Organic residues POPs Labelling GMO My
Slide 15: High profile food scares have expensive consequences for producers
High profile food scares have expensive consequences for producers… Year Brand/ Contamination Impact Cost Country 2008 North Salmonella About 1,500 people sick throughout US ~ USD 100- America/ in tomatoes & Canada – pulling of products from 250m Mexico and peppers shops & restaurants FreshPlaza 200
Slide 16: ...and destroy market value
…and destroy market value 2007 example: Menu Foods is the largest maker of wet cat and dog food in N. America Contamination Direct impact Indirect impact Melamine contamination of pet 48% drop in share price in first week. Tens, possibly foods due to illegal use of a plasticiser hundreds of Threat o
Slide 17: Horsegate: A reminder of the need for more systematic testing
Horsegate: A reminder of the need for more systematic testing Well-known brands were caught-up in the scandal Results & Conclusions Dec 2012 Irish authorities become aware of the Of the 4,144 tests done to detect horsemeat, 193 adulteration in ABP Food Group tested positive (4.7%) burgers with 29%
Slide 18: Eurofins' response to help the industry
Eurofins‟ response to help the industry Eurofins’ response to aid the industry Roll-out of technical resources to support local labs Rapid capacity scale-up by allocating more of its DNA-testing resources to food analysis, and in particular, meat speciation Launch of relevant meat speciation and
Slide 19: Eurofins is meeting the demands of global players
Eurofins is meeting the demands of global players The largest global food & beverage producers and retailers are clients of Eurofins 2012 Sales in 2012 Sales in Food and Beverage EUR billion Retailers EUR billion Nestlé Switzerland 76.2 Wal-Mart Stores USA 338.3 Unilever UK /Netherlands 51.3 Carre
Slide 20: The Pharma testing market is both healthy and full of potential
The Pharma testing market is both healthy and full of potential Need for big pharma Rapid technological change & companies to expand increasing complexity in testing new drugs pipelines require ongoing investment in technology & expertise The increasing complexity of clinical trials leads to incre
Slide 21: Underlying trends are intact for continued growth
Underlying trends are in tact for continued growth Global Drug R&D Spending (US$ bn) Large pharmas need to refill their product pipeline as the „blockbusters‟ start to come off patent Drug development expenditures have increased substantially in recent years Total R&D is over USD 120bn and is
Slide 22: Eurofins Pharma Services: activity groups
Eurofins Pharma Services: 6 activity groups Spanning the entire drug development cycle Genomics Discovery Pre-clinical / Clinical Registration Pharma Pharmacology Early (Central Products Development Laboratory) Testing / cGMP QC Sequencing High-throughput- Pharmacology Biomarkers Regulatory/Biocides
Slide 23: Top 10 pharmaceutical companies are all clients of Eurofins
The Top 10 largest global pharmaceutical companies are all clients of Eurofins Top 10 pharma companies Country Pfizer USA Global CRO Market Sanofi Aventis France Market GlaxoSmithKline UK CAGR* Breakdown Novartis Switzerland USA 60% 12% AstraZeneca UK Europe 20% 9% Merck & Co USA Japan 8% 18% Rest o
Slide 24: The Environmental testing market continues to grow
The Environmental testing market continues to grow Rise in Progress in epidemiology contamination & & medicine has identified pollution issues more compounds as toxic Increasing demand by citizens for a clean environment EU expanding regulation (e.g. REACH) Increasingly long list of products i
Slide 25: Eurofins serves all the main environmental testing markets
Eurofins serves all the main environmental testing markets Eurofins is the No.1 environmental testing service provider in the world* Lancaster Environmental Consulting and Testing is the laboratory sampling companies of choice for Fortune 500 are natural partners companies in the USA WATER AIR SOIL
Slide 26: Global trends in regulation support the business
Global trends in regulation support the business Strong regulated markets (EU, USA) are still amending and adding regulations Eastern European rules catching up with EU Fast development of regulation in Asia Regulation used for support of trading blocks (e.g. EU, NAFTA, ASEAN) Major pieces o
Slide 27: EU regulations a key driver for the testing industry
EU regulations a key driver for the testing industry – e.g. REACH directive Objectives Examples of affected products or industries Listing and assessing the safety of 30,000 Metals, resins, acids, solvents, oils, fibres in textile, car chemical substances used by industries in components, toys, co
Slide 28: Outsourcing adds to market growth
Outsourcing adds to market growth Examples of laboratories outsourced to Eurofins Company Outsourced Activity Country Danish Hydrology Inst. Official water reference lab Scandinavia Suez/Sita Envirolab The Netherlands Danish farmers association Steins‟ water/environment laboratory Denmark Southern W
Slide 29: Eurofins' strategy builds high Barriers to Entry
Eurofins‟ strategy builds high Barriers to Entry Offering a premium quality service … ... and leveraging internal efficiencies Portfolio: over 100,000 reliable methods – Industrialising the laboratory process: unique in the world and ahead of rationalisation of sites and personnel competition
Slide 30: Contents
Contents Introduction Market & Strategic Positioning Finance & Outlook Summary Appendix FY 2013.ppt 1-C-IR-PRE-01186478 BPAN 26.02.2014 30
Slide 31: Laboratory Network Investments (1/2): Greenfield projects
Laboratory Network Investments (1/2): Greenfield projects in high-growth markets Country Market Operational achievements China Food, Pharma India: Food Lab profitable in year 2 of Asia India Pharma, Food start-up Japan Food, Pharma Japan: Radioactivity lab set up; and profitable in year of establish
Slide 32: Laboratory Network Investments (2/2): Expand / modernise laboratory sites
Laboratory Network Investments (2/2): Expand / modernise laboratory sites 80 new/expanded modern state-of-the-art sites to enable consolidation / closure of smaller or old sites Total of ca. 240,000 m2 added or brought to most modern standards between 2005 – 2013 (40,000 m2 in 2013 alone) 100,
Slide 33: Market Share: Eurofins is the leader in its industry
Market Share: Eurofins is the leader in its industry – and we continue to reach new market leadership positions New Markets 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 X = Market Entry Denmark: Food and Env. X No 1 Brazil: Food Testing X No 1 France Environment X No 1 USA:
Slide 34: Heavy investment in new markets and resources for future profits
Heavy investment in new markets and resources for future profits Building corporate Bringing recently Under development resource for future size acquired labs to group perimeter and growth standards Start-ups: 17 start ups Recruitment of top Deploy IT systems between 2006 and 2010 leadership e
Slide 35: Continued earnings expansion despite heavy investments for future growth
Continued earnings expansion despite heavy investments for future growth FY 2013 FY 2012 Adjusted Separately Statutory Adjusted Separately Statutory +/- % Results disclosed Results Results disclosed Results Adjusted EURm Results items items Revenues 1,225.6 1,225.6 1,044.0 1,044.0 17.4% EBITDA 219.3
Slide 36: Strong underlying profitability enables investments
Strong underlying profitability enables investments EBITDA Composition EURm Adjusted EBITDA One-off costs from Temporary losses Reported EBITDA integration related to network and reorganization expansion and start-ups FY 2013.ppt 1-C-IR-PRE-01186478 BPAN 26.02.2014 36
Slide 37: Growth and Profitability are critical objectives
Growth and Profitability are critical objectives Group Profitability Objectives++ 3-tiered margin support towards mid- term profitability objective 2,500 22% 1. Start of profit contribution from Group Adjusted EBITDA margin % 20% start-ups 2,000 2. Proportion of companies in Group Revenues 18% 1,5
Slide 38: Solid Balance Sheet
Solid Balance Sheet Covenants applicable to financial instruments: OBSAAR Dec‟13 Dec‟12 Max.limit issued June 2010 Net Debt/ Adjusted EBITDA 1.76 x 1.70 x 3.5 x maturity: 2010 bond EUR 176m across 2015, 2016, 2017 Schuldschein Net Debt (EUR m) 386.8 300.8 EUR 170m issued in July 2011 to le
Slide 39: High Degree of Financial Flexibility
High Degree of Financial Flexibility Debt ratios remain well below Substantial headroom in the balance sheet covenant limits despite EUR 215m cash invested in the business in 2013 Net Debt/ Adjusted EBITDA: max 3.5x Gearing (Debt/Equity) covenant dropped from all instruments High financial fle
Slide 40: Outlook: becoming the world leader in the bioanalytical testing market
Outlook: becoming the world leader in the bioanalytical testing market Sustainable Market Growth Drivers + Key Success Factors = Solid Outlook 2013-2017 Objectives Food safety & contamination issues Unique technological portfolio of over 100,000 methods 2013: achieved EUR 1,226m of New regul
Slide 41: Contents
Contents Introduction Market & Strategic Positioning Finance & Outlook Summary Appendix FY 2013.ppt 1-C-IR-PRE-01186478 BPAN 26.02.2014 41
Slide 42: Conclusion: our sustainable competitive advantage
Conclusion: our sustainable competitive advantage Best in class technology and quality give best brand High-growth, non-cyclical markets driven by secular protection mega-trends No. 1 or 2 worldwide in most business lines Advancing globalisation but with very few global Strong international presence
Slide 43: Appendix / Back up slides
Appendix / Back up slides FY 2013.ppt 1-C-IR-PRE-01186478 BPAN 26.02.2014 43
Slide 44: Consolidated Income Statement
Consolidated Income Statement 2013 2012 EUR Thousands Adjusted Separately Total Adjusted Separately Total Note results 1 disclosed results 1 disclosed items 2 items 2 Revenues 3 4.1 1,225,572 - 1,225,572 1,043,963 - 1,043,963 Operating costs, net 2.1 -1,006,291 -30,191 -1,036,482 -867,466 -15,268 -8
Slide 45: Consolidated Balance Sheet
Consolidated Balance Sheet EUR Thousands 2013 2012 Restated 2013 2012 Restated Note Note Property, plant and equipment 3.1 251,113 209,304 Total shareholders' equity 394,740 371,992 Goodw ill 3.2 456,388 402,662 Borrow ings 3.1 666,875 383,037 Other intangible assets 3.2 86,382 69,026 Derivative fin
Slide 46: Consolidated Cashflow Statement
Consolidated Cashflow Statement EUR Thousands Note 2013 2012 Cash flows from operating activities Profit before income taxes 89,063 81,677 Adjustments for: Depreciation and amortisation 3.1, 3.2 66,880 54,824 Non-cash stock option charge and acquisition-related expenses, net 2.4 9,977 5,191 Other no
Slide 47: Eurofins has vastly outperformed the market since its IPO
Eurofins has vastly outperformed the market since its IPO and each of its 3 equity offerings (based on share price of EUR 186.3 as of 31 December 2013) Total equity raised in 4 offerings: only EUR 56m Since IPO Eurofins: +10,634% (34% CAGR) CAC 40: +55% (3% CAGR) SBF 120: +77% (4% CAGR) S&P 500: +11
Slide 48: Post acquisition and integration, both sales and profits increase significantly
Post acquisition and integration into Eurofins, both sales and profits increase significantly Illustration Growth drivers post acquisition: 1) Sales increase through cross selling of Actual example of an acquired lab: Eurofins lab specialities internationally 2) Cost reduction – focus on most freque