Getinge Group: Focus on profitability and growth

  Getinge Group: Focus on profitability and growth

Business Wire

GETINGE, Sweden -- February 8, 2013

Regulatory News:

Press release regarding Getinge’s Capital Markets Day on 8 February

The Getinge Group has long performed very well and the company’s strategy for
continued profitable growth remains firm. The areas of focus for the Group’s
future performance are continued investments in product development,
programmes to increase the Group’s exposure to rapidly expanding emerging
markets and initiatives to improve the Group’s cost-effectiveness and
competitiveness. Acquisitions – which have played a significant role in the
Group’s expansion – remain a cornerstone for creating scope and critical mass,
and for positioning the company as a formidable partner in an increasingly
consolidated healthcare market.

Efficiency enhancements Unlike the Group’s other business areas, Getinge’s
smallest business area, Infection Control, has experienced a weak
profitability trend in recent years. With the aim of clearly and sustainably
improve Infection Control’s profitability, an extensive action programme is
being implemented by the new management, which has been in position in the
business area since mid-2012. The programme aims to improve the business
area’s EBITA margin from its current level of about 12% to more than 17%
within a three to five-year horizon. A key element of the
efficiency-enhancement programme is concentrating the business area’s
production to fewer plants with greater resources, while also focusing
manufacturing on assembly, which will result in component manufacturing being
outsourced to external suppliers. The efficiency-enhancement programme will
also include a review of distribution, logistics, administrative processes and
the discontinuation of unprofitable product lines. The completion of the
restructuring programme is expected to cost about SEK 440 m over the course of
four years. As a first step in the programme, Infection Control announced
earlier this week the relocation of sterilisation manufacturing from Skärhamn
in Sweden to China, and the discontinuation of water-treatment products.

Extended Care – which, unlike Infection Control, is reporting highly
favourable profitability – will also continue its efforts to further
strengthen competitiveness. Similar to Infection Control, Extended Care aims
to concentrate manufacturing to fewer units and to expand production to
low-cost countries. The decision to discontinue the production unit, which was
included in the acquisition of TSS, has already been communicated and the
costs of the discontinuation will be financed by the previously announced
restructuring costs. The continued enhancement of the business area’s
efficiency will result in additional restructuring costs of SEK 240 m, which
will be charged to the financial years 2013-2016.

The Group’s financial objectives Getinge has already communicated ambitious
plans concerning profit growth, capital efficiency and profitability. Under
the Group’s profitability targets, the aim is to achieve an EBITA margin (EBIT
adjusted for the amortisation/depreciation of acquisition-related surplus
values) of about 22%. Getinge had previously aimed to achieve the EBITA margin
target between 2013 and 2014. However, since market demand has experienced a
weaker recovery than expected, the currency scenario has become more
challenging and new costs have arisen due to the introduction of the so-called
medical device tax in the US, the Group does not believe that it will achieve
its EBITA margin target until 2015.

Increased exposure to emerging markets Getinge is acquiring the Turkish
company Trans Medical Devices Inc., which will be included in the Infection
Control business area. Trans’ range of autoclaves will represent Getinge’s
product offering in the growing mid-range segment and will contribute to
increased exposure to the emerging markets. The company is the market leader
in Turkey and commands a market share of about 35%. Trans has about 70
employees and generated sales of SEK 55 m in 2011.

Outlook The increasing uncertainty that marks several of the Group’s key
markets makes it more difficult to assess the growth prospects for the current
year. Demand in the markets outside North America and Western Europe, which
comprise an increasing share of Group sales, is expected to continue to show
strong growth in terms of medical-technical capital goods such as disposables
and services. In the Western European markets, demand for medical-technical
capital goods is expected to remain weak, while demand for disposables and
services is expected to continue to grow. In North America, the demand for
both medical-technical capital goods and disposables is expected to increase,
albeit modestly. Overall, organic volume growth is expected to remain in line
with that of 2012.

Profit growth, excluding restructuring costs, is expected to be favourable in
the current year, even in consideration of the introduction of what is known
as the medical device tax in the US in 2013, and of adverse exchange-rate
effects. The introduction of the medical device tax is expected to have an
impact of SEK 130 m on earnings for the current year, and the negative
exchange-rate effects are expected to amount to about SEK 170 m, of which
about SEK 130 m pertains to transaction effects.

In terms of the profit trend for the current year, growth is expected to
become stronger during the second half of the year compared with the first six
months. Earnings in the first quarter of 2013 are expected to be lower than in
the year-earlier period.

GETINGE GROUP is a leading global provider of products and systems that
contribute to quality enhancement and cost efficiency within healthcare and
life sciences. We operate under the three brands of ArjoHuntleigh, GETINGE and
MAQUET. ArjoHuntleigh focuses on patient mobility and wound management
solutions. GETINGE provides solutions for infection control within healthcare
and contamination prevention within life sciences. MAQUET specializes in
solutions, therapies and products for surgical interventions, interventional
cardiology and intensive care.

The information is such that Getinge AB must disclose in accordance with the
Swedish Securities Market Act and/or the Financial Instruments Trading Act.

This information was brought to you by Cision


For further information, please contact:
Johan Malmquist
CEO, Getinge Group
Telephone: +46 10 335 55 33
Ulf Grunander
CFO, Getinge Group
Telephone: +46 10 335 55 80
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