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Sartorius (SRTGR; NR, BBB S) {SRT GR Equity} 1Q24 Earnings

HEALTHCARE

Equities is struggling on a 1Q earnings miss - co has left FY guidance unchanged (firm numbers) saying recovery to come in 2H. We saw credit pricing scepticism on deleveraging (post acquisition/issuance) trading wide for ratings - guidance on leverage at just above 3x (vs. target 2-3x) by year end is reassuring but small FCF (even on 13% capex) leaves us at managements peril on any new acquisitions.

  • Equities taking it this morning on a 1Q earnings miss; revenue at €820m (c859m) & EBITDA at €234m (c€240m) at a margin of 28.6% (c28.4%) - guidance is unch at 30%+ for FY24.
  • Headline sales at -7.6% cc growth yoy includes +2% contribution from acquisitions. Its pointing to China weakness (sales -4.4%) as driver for miss. Guidance is unch at "mid to high single digit" growth with +1.5% contribution from acquisitions.
  • Operating cash flows were €45m - sharp fall from €202m in prior year - yet capex continued running at €135m or 15.7% of sales - its guiding to 13% for FY24.
  • Importantly for us leverage is at 4.4x now (from 5x) and its guiding to just above 3x by year-end - nearly at target 2-3x and (should) satisfy raters for now. It has added leverage guidance "excludes potential acquisitions" - an important aside for us there.
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