Eurofins Raises Its Revenues Objectives for 2018 to EUR 3.8bn (4bn Pro-Forma), to 4.3bn for 2019 and to 4.7bn for 2020*
The anti-trust clearance received last week from U.S. authorities with regards to the acquisition of Covance Food Solutions enables Eurofins (Paris:ERF) to announce new objectives for the last 3 years of its 2020 five years plan aimed at building a leading one of a kind global laboratories platform in its chosen markets.
Based on acquisitions signed or closed to date, including Covance Food Solutions and assuming organic growth of 5% in 2018, Eurofins reported revenues* should grow by about 28% vs 2017 to exceed EUR 3.8bn and pro-forma revenues* should grow from EUR 3.4bn in 2017 to EUR 4.0bn in 2018; enabling the company to double in size again in only 3 years since 2015, like it did already between 2012 and 2015.
In 2019, assuming 5% organic growth and acquisitions generating full-year revenues* of about EUR 200m, consolidated at midyear, Eurofins should be able to report revenues* in excess of EUR 4.3bn. Based on the same organic growth and acquisitions assumptions for 2020, Eurofins is setting an objective to reach revenues* in excess of EUR 4.7bn in 2020.
In terms of profitability, acquisitions signed so far in 2018, like those of 2017, should have an accretive impact on both 2018 and 2019 consolidated EBITDA margin. Overall, as the group will start to generate better utilization of the massive laboratories expansions it carried out and start-ups it opened in the last few years, Eurofins’ adjusted EBITDA margin should continue to improve in 2018 and more so in 2019 and 2020. Eurofins thus confirms its 20% adjusted EBITDA margin objective for 2020.
From a cash flow perspective, the bulk of the 5 years investment program to build very large state of the art high throughput laboratory campuses for advanced assays and a broad network of local start-up laboratories for time critical assays, supported by the latest IT solutions should be mostly completed by end 2019. As a result, capex and reorganisation costs should have a much more limited impact on free cash flow from then on.
Based on the hypotheses presented, to achieve the objectives stated above, Eurofins should not require additional equity and its net debt to pro-forma adjusted EBITDA leverage** should remain largely within its covenant, in line with Eurofins’ management intention to maintain a strong financial discipline as it always did since the creation of the company.
Comment from Dr. Gilles Martin, Eurofins CEO: “I am very pleased to announce that on a pro-forma basis Eurofins is bringing forward by two years to 2018 its objective to reach EUR 4.0bn of revenues* initially set for 2020 in 2015. This achievement will represent a clear milestone for the company in its effort to build a unique and hard to replicate platform of world class testing laboratories. We are particularly proud of bringing state of the art testing services to 44 countries and contributing to a better and healthier life for millions of people via frequent innovations across our business lines. Indeed Eurofins has not only become the global leader in most of its chosen markets (food, environment and Biopharmaceutical products testing, Agroscience CRO and other business lines) but it is also recognized by most as a scientific leader in its fields of activity. Achieving this position in record time has required massive investments in technology, talented scientists, technicians and leaders, world class laboratories and IT solutions. It is thus all the more pleasing to note that this rapid growth, multiplying the size of the company by 4 in just 6 years, is being carried out while improving the company’s margins, which reflects our balanced commitment to serving the community, offering opportunities and sustainable jobs to our employees and creating long-term value for our shareholders.”
*at constant exchange rates vs the average exchange rates of the year 2017
**net debt to last twelve months (LTM) pro-forma adjusted EBITDA
Notes for the editor:
Eurofins – a global leader in bio-analysis
Eurofins Scientific through its subsidiaries (hereinafter sometimes “Eurofins” or “the Group”) believes it is a scientific leader in food, environment and pharmaceutical products testing and in agroscience CRO services. It is also one of the independent market leaders in certain testing and laboratory services for genomics, discovery pharmacology, forensics, CDMO, advanced material sciences and for supporting clinical studies. In addition, Eurofins is one of the emerging players in specialty clinical diagnostic testing in Europe and the USA. With over 35,000 staff in more than 400 laboratories across 44 countries, Eurofins offers a portfolio of over 150,000 analytical methods for evaluating the safety, identity, composition, authenticity, origin and purity of biological substances and products, as well as for innovative clinical diagnostic. The Group objective is to provide its customers with high-quality services, accurate results on time and expert advice by its highly qualified staff.