STOCKHOLM, Sweden, Feb. 13, 2002 (PRIMEZONE) -- Gambro:
-- Group revenues increased 20%
-- Operating earnings, EBITDA, up 8% with improvements in business
areas but negative effect from laboratory income and legal
expenses
-- Cash flow from operations at MSEK 608 (excl currency effect of
MSEK -619), driven by improved working capital, selective
acquisitions and capital gain
-- Incl non-recurring, EPS and CEPS amounted to SEK -1.22 (2.85)
and SEK 8.50 (13.81) resp.
-- Dividend proposal SEK 1.10 (1.10)
MSEK
excl.
non-
recur-
ring Q4 Currency Full year Currency
items 2001 2000 Change adjusted 2001 2000 Change adjusted
Revenues 7,176 6,143 17% 10% 26,720 22,245 20% 9%
EBITDA* 1,076 925 16% 7% 4,268 3,969 8% -2%
EBITDA*
margin 15.0% 15.1% 16.0% 17.8%
EBITDA 1,041 874 19% 10% 3,305 3,983 -17% -26%
(incl
non-
recurring
items)
* Earnings before depreciation and amortization
Fourth quarter highlights:
-- Strongest quarterly revenue growth in three years, +10%
currency adjusted.
-- Product business areas margin improved significantly in the fourth
quarter, from 16.1% in 2000 to 19.0% in 2001.
-- Very strong cash flow due to reduction of working capital and
selective acquisitions. Net debt reduced by MSEK 484.
-- US revenue per treatment improved by USD 8 to USD 242 due to
improved payer and treatment mix and ramp up of laboratory
business.
-- Laboratory issues solved: MSEK 31 settlement of the US Department
of Justice investigation initiated in April 2001 offset by billing
of previously unbilled tests and reversal of over-accrued
expenses.
-- Conservative approach in Argentina, write-off of all goodwill
and receivables, MSEK 290.
-- Capital gain on divestiture of Thoratec shares MSEK 293.
"I'm pleased to see that all Gambro business areas have exceeded market growth. The cash flow has improved positively for the year. We have seen a turnaround in the margin trend for Gambro Healthcare and the product business areas have improved their margins quarter-by-quarter compared to 2000," said Soren Mellstig, Gambro president and CEO.
Key data, present structure (excluding nonrecurring items)
Q4 Full year
MSEK 2001 2000 2001 2000
Revenues 7,176 6,143 26,720 22,245
Operating
earnings
before
depr. 1,076 925 4,268 3,969
(EBITDA)
EBITDA margin, % 15.0% 15.1% 16.0% 17.8%
Operating earnings
(EBIT) 313 272 1,472 1,569
EBIT margin, % 4.4% 4.4% 5.5% 7.1%
Earnings before
tax (EBT) 94 130 704 983
Earnings per
share (EPS) SEK (1) -0.06 0.18 0.39 0.96
Earnings per share (EPS)
SEK (1)
including nonrecurring items -0.03 -0.80 -1.22 2.85
Cash earnings per share
(CEPS) SEK (2) 2.16 2.07 8.50 7.92
Cash flow from operations (3) 670 587 -11 1,103
Cash flow from operations
per share (3) 1.94 1.70 -0.03 3.20
Net debt 9,434 7,275 9,434 7,275
1) After full tax
2) Net income plus depreciation and amortization divided by
number of shares
3) Cash flow before acquisitions/divestitures and taxes
Fourth Quarter 2001
For the Group, the fourth quarter 2001 revenues were MSEK 7,176 (6,143) corresponding to a growth of 17% (10%*). This represents the strongest quarter in revenue growth in three years. Overall Group revenues developed positively on main markets in Europe and the US as well as on prioritized markets in the rest of the world.
For Gambro Healthcare, revenues grew by 21% (14%*) including good growth in the US and the rest of the world. For Gambro Renal Products, revenues increased by 12% (6%*). Gambro BCT revenues increased by 7% (1%*) due to a general reduction in blood donations towards the end of the year.
The group experienced strong cash flow from operations due to reduction of working capital, selective acquisitions and a positive effect on nonrecurring items. Net debt was reduced by MSEK 484 to MSEK 9,434.
Operating margin, EBITDA, for the Group was 15.0 % (15.1%). The margin was negatively affected by legal and administrative expenses of MSEK 72 related to the subpoena received in June by Gambro Healthcare US and by changed laboratory revenue recognition of MSEK 60 (see section "Other").
The underlying businesses continued to improve their profitability, with higher margins in all business areas compared to the fourth quarter last year. Significantly higher margin was recognized for the product business areas, from 16.1% in 2000 to 19.0% in 2001. Gambro Healthcare continues to show improved performance. The EBITDA margin for Gambro Healthcare reached 14.6%.
In December, Gambro Healthcare Laboratory Services reached a preliminary settlement with respect to the US Department of Justice investigation commenced in April 2001. Under the proposed settlement, Gambro has agreed to pay MUSD 3 (MSEK 31), with no admission of any wrongdoing. In the fourth quarter, some of the previously unbilled laboratory tests provided for in June 2001 were billed and a portion of the expense reserve was reversed. These amounts, totalling MUSD 3 ( MSEK 31), were offset against the settlement.
The economic uncertainty in Argentina has caused Gambro to make a write- off of the remaining goodwill value, MSEK 228, in December 2001. In addition, a provision for receivables not possible to collect amounting to MSEK 62 was also established.
Approximately half of Gambro's holding of Thoratec Corp. shares was divested with a capital gain of MSEK 293 (cash effect MSEK 304).
Nonrecurring items
Q4 Full year
MSEK 2001 2000 2001 2000
Result from divestitures 628
Provision for repayments of
lab services -927 -563
Restructuring GHc, US -106 -106
Reversal of prior provisions 27 55 27 55
Write-down of fixed assets -228 -1,379 -228 -1,379
Write-down of receivables in
Argentina -62 -62
Total operating items -263 -1,430 -1,190 -1,365
Capital gain on sale of shares 293 293
Write-down of shareholdings -145 -145
Total financial items 293 -145 293 -145
Reversal of tax provisions 917 1,820
Utilization of tax losses
carried forward 102 102
Tax on operating and financial
items -122 319 239 342
Total tax items -20 1,236 341 2,162
Total nonrecurring items 10 -339 -556 652
Year End Report 2001
For the full year, Gambro reported revenues of MSEK 26,720 (22,245), an increase of 20% (9%*). Group revenues developed positively on main markets in Europe, the Americas and on prioritized markets in the rest of the world.
Revenues for Gambro Healthcare were up 25% (12%*), with a gradual improvement in revenue per treatment in the US. Gambro Renal Products revenues increased by 14% (6%*) with a continued good development in Europe, good growth in prioritized areas in the rest of the world as well as continuously increasing internal sales. For Gambro BCT, revenues increased by 18% (7%*) with favorable growth in most markets.
Operating earnings, EBITDA, increased by 8% to MSEK 4,268 (MSEK 3,305 incl. nonrecurring items). Operating margin (EBITDA) for the Group was 16.0% (12.4% incl. nonrecurring items). Earnings, margins as well as revenues have been negatively affected with MSEK 250 by the changed laboratory revenue recognition methodology (see section "Other"). Also, costs related to the subpoena received by Gambro Healthcare in June 2001 had a negative impact on the margin. To date, costs related to the investigation, including legal fees and other costs of collecting the information requested in the subpoena, amount to MSEK 99 (recorded in "Others").
Gambro generated MSEK 2,454 in cash flow before investments, acquisitions and tax. This includes a negative currency effect of MSEK 641 primarily in working capital. It includes MSEK 423 invested in research and development, not capitalized. This cash flow funded investments in capitalized development cost of MSEK 195, investment in tangible and other intangible assets of MSEK 2,169 and investment in acquired technology (Gambro BCT) of MSEK 101, which resulted in a cash flow from operations of MSEK -11 (MSEK +608*).
(*) Currency adjusted
Outlook
Gambro's overall objectives for the year are to leverage the improved platform for growth and profitability. Focus will also be to define the business model as an integrated service provider and to explore new growth opportunities. The financial objectives for the group in 2002 are to deliver a revenue growth of 8-10%, improve the operating margin trend and further improve cash flow from operations. The financial results on a group level will be affected by costs related to the subpoena in Gambro Healthcare US.
Gambro Healthcare's objective is to have a yearly revenue growth of about 10%, mainly through organic growth, with only a few selective acquisitions and operating earnings growing more than revenues.
The objective for Gambro Renal Products is to achieve an annual increase in sales of 8-10%, with a steady increase in market shares. Increasing volumes and thereby reducing unit costs will further improve profit margins.
The goal for Gambro BCT is to achieve sales growth in excess of 10% in 2002. Long-term growth potential is enhanced by breakthroughs in expansive complementary operations, such as inactivation of viruses and bacteria (PET) and systems for automated separation of manually collected blood. While the profit margins on the new operations may be lower than on Gambro BCT's current core business, the growth potential is substantial.
Market Development
The renal care market is characterized by a stable year-on-year increase that is essentially unaffected by economic fluctuations. The annual global increase of patients is about 7%, although the growth figures vary widely between different geographic regions. The current growth rate is estimated at 5-7% in Europe, the US and Japan, and around 10% in other parts of the world. The product market is subject to price pressure in the region of 2-3% per year. The total value of the market is approximately 65 billion SEK (6.3 billion USD).
The blood bank technology market is driven by a worldwide shortage of blood and blood components and a constant demand for increased safety in the world's blood supply. The market for blood bank technology, including products for blood collection and blood purification, is approximately SEK 12 billion SEK (USD 1.2 billion) and is growing by 5-6 percent per year.
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www.waymaker.net/bitonline/2002/02/13/20020213BIT00740/bit0001.doc The full year-end report www.waymaker.net/bitonline/2002/02/13/20020213BIT00740/bit0001.pdf The full year-end report