Company Announcement no. 9 2009/10 - Interim report for Q2 and Q1-Q2 2009/10

POSITIVE DEVELOPMENT IN REVENUE AND RESULTS CONTINUES – UPWARD ADJUSTMENT OF BOTH REVENUE AND EARNINGS FOR FY 2009/10

Ambu won market share and saw continued growth in Q2 2009/10. In Q2 and year to date, growth in revenue was 7% when measured in local currencies, while in the first two quarters growth of 11% was recorded in a US market which saw market growth of 1-3%. The transfer of electrode production from Denmark to Malaysia is progressing according to plan. The gross margin has improved to 53.8% year to date, against 51.8% for the same period last year. The operating profit (EBIT) for Q2 was DKK 32.4m against DKK 25.0m for the same period last year. Year-to-date EBIT was improved by 26% at DKK 51.1m against DKK 40.4m for the same period last year. The EBIT margin was 11.4% year to date, against 9.4% for the same period last year. Based on the continued positive developments in important areas, Ambu is making an upward adjustment of its outlook for revenue and earnings in 2009/10. Expectations are of revenue of approx. DKK 925m against an earlier outlook of DKK 900-925m, an EBIT margin before special items of upwards of 12.5% against an earlier outlook of 12-12.5%, and finally a profit before tax of approx. DKK 110m against an earlier outlook of approx. DKK 100m.

“We are very pleased that Ambu is seeing continued growth, both winning market share and increasing earnings. With its GPS Four strategy, Ambu has defined a number of ambitious targets, and after the first half year of the strategy period, we are increasing both revenue and earnings beyond our expectations. The many initiatives in the form of intensified sales efforts, investments in IT systems, stronger focus on innovation and most recently the transfer of electrode production from Denmark to Malaysia are producing satisfactory results. Developments remain positive in the USA, and we still see considerable potential for growth in the world’s largest market for medico-technical products. With a gross margin of 53.8%, we have improved our efficiency. We are positive about the rest of the financial year, and so it is natural for us to make an upward adjustment of the outlook announced earlier in the year,” says Lars Marcher, President & CEO of Ambu.

Highlights

• Revenue for Q2 totalled DKK 234.7m against DKK 222.8m in Q2 2008/09, corresponding to an increase of 5%, or 7% when measured in local currencies. Year-to-date revenue was DKK 447.7m against DKK 431.4m in the same period last year, corresponding to an increase of 4%, or 7% when measured in local currencies.
   
• In Europe, growth in revenue in Q2 was 6% when measured in local currencies compared to the same period last year, and year-to-date growth has been 7% when measured in local currencies. In Q2, the strongest growth was seen in Sales Region South, which comprises Spain, Italy and Portugal, where growth of 8% was recorded, and in Sales Region NEM, which comprises the Nordic markets and the distributor countries where growth stood at 7%. In the USA, growth in Q2 and year to date was 11% when measured in the local currency compared to the same period in 2008/09.
   
• Within Airway Management, revenue grew by 25% in Q2 and by 19% year to date. Within patient Monitoring & Diagnostics, revenue was up 8% in Q2 and 10% year to date.
   
• Within Emergency Care, revenue fell by 3% in Q2 and year to date when measured against the same period last year.
   
• The operating profit (EBIT) for Q2 was DKK 32.4m against DKK 25.0m for the same period last year. Year-to-date EBIT was DKK 51.1m against DKK 40.4m for the same period last year.
   
• The profit before tax was DKK 34.1m in Q2 against DKK 21.8m for the same period last year. Year-to-date profit before tax was DKK 51.1m against DKK 38.5m in the same period last year, up 33%.
   
• Cash flows from operating activities amount to DKK 21.6m year to date against DKK 34.8m for the same period last year, which is primarily attributable to increasing inventories as a result of the establishment of buffer inventories in connection with the transfer of production and also to the expiry of the temporary extension granted in respect of the payment of VAT in Denmark.
   
• The free cash flow year to date was DKK -15.4m after investments of DKK 37.0m. In the same period in 2008/09, the free cash flow was DKK -40.2m after investments of DKK 75m.

Outlook for 2009/10 
 

For FY 2009/10 (1 October 2009 - 30 September 2010), an upward adjustment is made of the outlook for revenue to approx. DKK 925m from DKK 900-925m, while an EBIT of upwards of 12.5% before special items relating to the conduct of the pending patent cases is expected, against a previous outlook of 12-12.5%. The profit before tax is now expected to be in the region of DKK 110m against an earlier outlook of approx. DKK 100m. The outlook as regards the free cash flow is reduced to DKK 40-50m against an earlier outlook of DKK 60m before acquisitions. The change in the expected cash flow is attributable to the building of larger inventories following the decision to bring forward phase 2 of the transfer of production plan and also to the expiry of the temporary extension granted in respect of the payment of VAT in Denmark.

Conference call
A conference call and webcast on this announcement will be held in Danish on Wednesday, 5 May 2010, at 11 am Danish time. To participate, please call the following number five minutes before the start of the conference: +45 32 71 47 67.
 

Webcast (English text)

Click here to watch the webcast with English text. The conference will subsequently be made available on the Ambu website.

Webcast (Danish text)

Click here to watch the webcast with Danish text. The conference will subsequently be made available on the Ambu website.

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Contact
Lars Marcher, President & CEO, tel. +45 51 36 24 90, email: lm@ambu.com