Objective is to consistently deliver strong financial performance, achieving 17-18% EBITDA margin in 2010 and greater than 20% beyond 2010 while maximizing cash generation, through:
-- The deployment of a new organization;
-- The evaluation of alternative strategic options for non-core businesses;
-- The implementation of cost reduction programs;
-- A continuous commitment to patient-focused technological innovation;
-- Mid single digit (3-5%) annual revenue growth. Guidance for 2008: greater than 11.5% EBITDA margin, greater than 5% EBIT margin.
The Board of Directors of Sorin S.p.A. (MIL:SRN), meeting under
the chairmanship of Umberto Rosa, approved today the 2008-2010
Strategic Plan presented by the new CEO Andre-Michel Ballester. The
guidelines of the Plan will be presented tomorrow to the financial
community at the Sorin Group Analyst and Investor Meeting.
The Plan will be implemented through a new organizational model
and a reinforced management team. The guiding principles of the new
Business Unit based structure are: clear accountability, fast
decision-making, enhanced performance visibility and cost
effectiveness.
-- Franco Vallana is confirmed as Chief Scientific Officer.
Franco, who has served in the company for more than 35 years,
will focus on the Sorin Group´s key innovation initiatives;
-- The Cardiac Rhythm Management Business Unit continues to be
led by Fred Hrkac, who joined the Sorin Group in 2005 from
Johnson & Johnson;
-- The Cardiopulmonary Business Unit is led ad interim by Franco
Vallana, and starting from February will be led by Michel
Darnaud. Michel brings to the Sorin Group more than 30 years´
experience in the medical technology industry, following
international executive positions with Boston Scientific and
Baxter. Michel is former Chairman of Eucomed, the European
medical technology industry association;
-- The Heart Valves Business Unit is led by Stefano Di Lullo, who
joined the Sorin Group in 2005 from Boston Scientific;
-- The Vascular Therapy Business Unit is led ad interim by
Andre-Michel Ballester;
-- The Renal Care Business Unit is led by Eric Beard, previously
President Corporate International.
Cost containment is an important driver of performance improvement
across the entire organization. To this end, the Board of Directors
approved today a specific set of restructuring initiatives that will
yield annualized savings in excess of 20 million Euro (at full speed
in 2010, but already significant in 2009), and for which an
extraordinary charge of 18 million Euro will be recorded in 2007.
Alternative strategic options are being explored for Vascular
Therapy and Renal Care, and consequently the 2008-2010 Plan is focused
on the three core businesses of the Sorin Group - Cardiac Rhythm
Management, Cardiopulmonary and Heart Valves.
The Cardiac Rhythm Management Business Unit is projecting a 7 to
10% annual revenue growth - therefore exceeding market growth. The
Sorin Group will continue gaining share in the High Voltage market
(ICDs and CRT-Ds) thanks to a full pipeline of innovative technologies
aimed at the fast growing Heart Failure segment. The Sorin Group is
committed to continue to be a recognized leader in the haemodynamic
management of heart failure patients. In Europe, the Sorin Group will
consolidate its current Number 3 position in the Low Voltage market
and target a 10% market share of the High Voltage market. In addition,
the Sorin Group will reinforce its Number 3 position in Japan and
aggressively pursue its expansion program in the US thanks to an
enlarged sales organization and the launch of the Ovatio CRT device in
H1 2008.
The Cardiac Rhythm Management Business Unit will also achieve a
significant reduction of its manufacturing lead time allowing an
optimization of its inventory profile to improve cash flow generation.
The Cardiopulmonary Business Unit will consolidate its current
Number 1 world-wide position (with an estimated 40% market share) in
this stable and profitable market, by confirming excellence in product
and service delivery, further strengthening its quality leadership and
driving market development through technological innovation. In
particular, the company will launch during the next 3 years the
component product and service offerings of the proprietary APOPS
system designed to improve patient safety and procedure efficiency.
The Cardiopulmonary Business Unit will generate profitable sales
growth in the low single digit range and will be a key contributor to
the acceleration of the Operating Cash Flow generation of the company.
The Heart Valves Business Unit will pursue its US market
penetration program following the recent commercial launch of its new
tissue valve, Mitroflow. Thanks to its unique haemodynamic profile
Mitroflow will become one of the valves of choice for surgeons in the
US. In Europe, the Sorin Group will continue to gain share with a full
portfolio of tissue valves and repair products. The Sorin Group aims
at maintaining its leading global position in the mechanical valve
segment. The resulting projected annual revenue growth is 4-6%,
exceeding market growth particularly in the tissue valves segment
where the company intends to gain share globally.
The Heart Valves Business Unit will optimize its Cash Flow
generation through an enhanced product inventory management program.
The new management team is committed to consistently deliver
strong financial performance, growing consolidated EBITDA margin to
reach 17-18% in 2010, and above 20% beyond 2010. Gross margin
percentage is planned to increase by greater than 100 b.p. per year,
thanks to a favourable product mix, the launch of innovative new
products at a premium price and several manufacturing cost reduction
programs. SG&A, as a percentage of revenues, is planned to decrease by
greater than 100 b.p. per year, thanks to a further streamlining of
the G&A structure and to a reduction of management layers. R&D as a
percentage of revenue will increase slightly, confirming the Sorin
Group´s commitment to innovation and ensuring long term sustainable
growth.
During the Plan period (2008-2010), the Sorin Group is committed
to an underlying annual revenue growth of 3 to 5%.
The improvement in EBITDA, coupled with zero Working Capital
increase and a tight Capex control, will generate in excess of 40
million Euro of Operating Cash Flow by 2010.
The management confirms the guidance previously given for the
fourth quarter of 2007: revenues in line with same period last year,
at fixed exchange rates, and EBITDA margin expected to recover from
the third quarter and to be in line with the fourth quarter of last
year.
Guidance for 2008 indicates greater than 11.5% EBITDA margin,
greater than 5% EBIT margin and revenue growth of 2-3% (at current
business perimeter and comparable exchange rates), with Operating Cash
Flow (before restructuring) in excess of 15 million Euro and a stable
Net Financial Position.
About the Sorin Group
The Sorin Group (Bloomberg: SRN.IM; Reuters: SORN.MI), a world
leader in the development of medical technologies for cardiac surgery,
offers innovative therapies for cardiac rhythm dysfunctions,
interventional cardiology and the treatment of chronic kidney
diseases. The Sorin Group includes these brands: Dideco, CarboMedics,
COBE Cardiovascular, Stockert, Mitroflow, ELA Medical, Sorin
Biomedica, Bellco and Bellco-Soludia. At the Sorin Group 4,500
employees work to serve over 5,000 public and private treatment
centers in more than 80 countries throughout the world. For more
information, please visit: www.sorin.com.
