Weak demand: Sartorius with a hangover after a boom – shares are falling

Weak demand
Sartorius with a hangover after a boom – shares are plummeting

April 18, 2024, 4:27 p.m

Listen to article

Customers are hesitant – especially in China. The laboratory and pharmaceutical supplier Sartorius is starting the year with a setback, but is sticking to its goals. Initial analysts consider this to be ambitious. There is doubt among investors. The paper loses significantly.

The laboratory and pharmaceutical supplier Sartorius has sent its investors into turmoil. The DAX group is struggling with persistently weak demand from China. In the first quarter, sales fell by a good nine percent to 820 million euros, as the Göttingen company announced. The company reported an eight percent increase in orders and a noticeable revival in its core business with consumables. “In contrast, customers, especially in China and partly also in Europe, showed a pronounced reluctance to invest.” Kreuzburg also expects business to recover in China in the second half of the year. But investors reacted sniffily: the paper fell by up to 17 percent to its lowest level since December.

In the first three months of 2024, the operating result (Ebitda) fell by almost 14 percent to 234 million euros. The bottom line is that profits fell to 70 million from 116 million euros in the same period last year. The group confirmed its forecast for the year as a whole and continues to expect moderate business development in the first half of the year and then increasing momentum. Sartorius expects a currency-adjusted sales increase in the mid to upper single-digit percentage range. The operating return on sales (Ebitda margin) is expected to increase to just over 30 (previous year: 28.3) percent.

“Many customers are basically slowly switching back to investment mode,” said Kreuzburg confidently with a view to his annual targets. Savings should also help. Sartorius plans to cut up to 300 jobs worldwide this year, mainly through fluctuation and the non-renewal of fixed-term contracts. Since the beginning of the year, 300 jobs have already been lost, compared to around 1,300 last year. Sartorius currently has a good 14,300 employees, still 60 percent more than in 2019 before the pandemic, as Kreuzburg emphasized.

The analysts at Berenberg Bank spoke of a weaker start to the year than they had feared. It will likely be a challenge for Sartorius to achieve its annual targets. During the corona pandemic, Sartorius benefited from high demand for its products, which were used in the production of Covid vaccines and medications. The growth rates were over 30 percent. Last year, however, this special boom came to an abrupt end. At its peak, the price had risen to more than 800 euros.