MILAN, Italy, May 12 /PRNewswire-FirstCall/ -- Sorin's Board of Directors, meeting today in Milan under the chairmanship of Umberto Rosa, reviewed and approved the report on operations in the first quarter of 2004 presented by Drago Cerchiari, the Company's Chief Executive Officer.
Revenues for the first quarter(1) totaled 178.2 million euros, up from pro forma revenues of 171.3 million euros in the same period last year. On a comparable basis, the growth rate was 6.5%.
The Cardiac Surgery Business Unit increased its revenues to 105.8 million euros, for a year-over-year rise of 6.3% on a comparable basis. The main reasons for this improvement were gains in cardiopulmonary products (+6.1%) and cardiac valves (+8.2%). The cardiac valve operations significantly strengthened their presence in North America (+19.9%) and increased sales of tissue valves (+36%).
The Cardiac Rhythm Management Business Unit booked revenues of 40 million euros, up 3.4% on a comparable basis from the first three months of 2003. Unresolved manufacturing issues continued to constraint Ela Medical's ability to take full advantage of the demand for its pacemakers and implantable defibrillators. Capital investments to increase production capacity are already under way, but the first, partial benefits of this program will not be felt until late this year.
The Vascular Therapy Business Unit also performed well, with revenues increasing to 5.5 million euros, or 10% more than in the first three months of 2003.
Lastly, Renal Care boosted revenues to 26.8 million euros (12.6% more than in the first quarter of 2003) due mainly to the contribution of a new filter production line.
EBITDA held at 18.2 million euros, little changed from the 18.1 million euros earned in the first quarter of 2003 (restated on a comparable basis).
EBIT totaled 2.3 million euros in the first quarter of 2004, up from a comparable figure of 2.2 million euros in the same period last year. The pro forma figure for 2003 was 5.0 million euros. The Sorin Group activities are significantly affected by the US$ fluctuactions, and its depreciation versus the Euro negatively affected the operating result for 2.8 million euros. Furthermore, the first quarter of 2004 was influenced by a decrease of 0.6 million euros in research grants. All in all, the first quarter 2004 EBIT improved, even despite an increase of about 1 million euros in R&D expenditures (the ratio of R&D spending to revenues was 7.2% in 2003 and 7.9% in 2004).
At March 31, 2004, net indebtedness increased to 330.7 million euros, compared with 296 million euros at January 2, 2004, due in part to a reduction of 11 million euros in assigned receivables. In order to have access to sufficient resources to support the growth of its businesses, the Group is in final negotiations for a medium/long-term loan of about 140 million euros that is being syndicated by Mediobanca, with simultaneous rescheduling of the balance owed on financing received in 1999 and 2001 to acquire Cobe Cardiovascular and Ela Medical.
The Group has launched several important projects to make its processes more effective and efficient. More specifically:
- It is reducing the number of business entities that handle distribution in Europe, in keeping with its new organization, which is based on a single Country Manager for all cardiovascular product lines. The goal is to simplify the corporate structure and reduce overhead;
- It is implementing programs that will reduce general and administrative costs at operations worldwide;
- It is pursuing initiatives that will reduce invested capital and increase cash flow.
The clinical trials needed to secure the CE mark for Janus, a drug-eluting stent, and obtain FDA authorization to sell the Mitroflow tissue valve in the United States are continuing.
The Board of Directors further decided to convene a Stockholders' Meeting for June 30 or July 1 or 2, 2004, on the first or subsequent callings, to vote on motions to increase the capital stock through an offering to the holders of stock options.
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1) Because Sorin became an independent company, with shares traded on the Italian Stock Exchange (Borsa Italiana), only recently, the comparisons with 2003 are made using pro forma operating data obtained by consolidating the historical data for the three months ended March 31, 2003 of those companies of the Snia Group that were headed by Sorin and making the adjustments necessary to include only the operating data attributable to the businesses transferred to Sorin S.p.A. In contrast to Snia's historical data, the pro forma consolidated statement of income for the first quarter of 2003 also consolidates the contribution of Carbomedics from the date of its acquisition (January 21, 2003). Moreover, the year-over-year changes have been computed on a comparable basis (i.e., assuming the same exchange rates and scope of consolidation) and as if Carbomedics had been consolidated as of January 1, 2003.
Sorin S.p.ACONTACT: Investor Relations: Marilena Giavara - Tel. +39-02-6332201e-mail: marilena.giavara@sorin.com Media Communications:Federico Unnia - Tel. +39-02-6332322 e-mail:federico.unnia@sorin.com
