Strong cash flow from operating activities leads to a positive net financial position – Group sales revenues increased despite difficult market conditions.
Heidenheim, Germany - November 7, 2017. In the first nine months of 2017, the HARTMANN GROUP, a leading international supplier of medical and healthcare products, succeeded in increasing its group sales revenues to EUR 1,514.7 million, a rise of 3.2% in relation to the prior year, despite difficult market conditions. The earnings before interest and taxes (EBIT) amounting to EUR 93.3 million (previous year: EUR 103.5 mil¬lion) were affected by the burden of high regulatory costs and the currently intense price pressure on markets for medical and healthcare products. At EUR 63.6 million, the consolidated net income was 6.7% lower than the previous year's figure (EUR 68.2 million).
"The decrease in the EBIT margin compared to the prior year is a reflection of our current ongoing efforts to secure the future of HARTMANN and make it even more robust than ever," says Chief Executive Officer Andreas Joehle. "These include fully implementing the European Medical Device Regulation, as well as investing in the integration of Lindor into the Group – and also the development and launch of innovative products and healthcare concepts."
Growth in the Wound and Infection Management divisions
HARTMANN succeeded in achieving higher revenues in all of its sales markets. In Europe, the Group achieved sales growth of 2.8%, whereby Germany, which still continues to be its most important single market, saw growth of 2.7%, which was therefore similar to the rate recorded in the rest of Europe. Outside of Europe, the growth rate amounted to 6.3%. Here, organic growth was achieved above all in Africa, Asia and Oceania.
The sales growth in the three core medical business segments, which accounted for 78.8% of the HARTMANN GROUP's total sales in the first nine months of 2017, was driven to a large degree by innovative treatment and diagnostic concepts.
In the Wound Management segment, sales rose to EUR 338.2 million, up 4.3% compared to the prior year, with the Group's HydroTherapy treatment concept and its customized sets for wound treatment making a particular contribution to the growth. Personal healthcare, an area which comes under this business segment, also achieved a rise in sales revenues in the third quarter, based again on higher unit sales of Veroval® self-testing kits and the Veroval® line of diagnostics devices.
The Incontinence Management segment recorded growth of 1.9% in sales revenues to EUR 490.2 million.
In the Infection Management segment, sales revenues rose by 3.7 % to EUR 365.2 million. The organic growth of 3.2% was predominantly due to successful unit sales of surface and hand disinfection products in connection with the measures taken in this segment to improve compliance with hygiene standards in hospitals and nursing homes.
The Other Group Activities segment saw sales climb by 3.5% to EUR 321.1 million.
Regulatory costs and price pressure placing burden on EBIT margin
While sales revenues had a positive impact, together with cost savings in logistics and production, there was, on the other hand, sustained high price pressure on the HARTMANN GROUP's sales markets as well as higher regulatory costs – primarily arising from the imple¬mentation of the in May introduced Medical Device Regulation. The HARTMANN GROUP's EBIT amounted to EUR 93.3 million which is down 9.9% compared to the prior year (EUR 103.5 million). This corresponds to an EBIT margin of 6.2%, compared to 7.1% in the equivalent nine-month period of 2016.
Strong cash flow from operating activities leads to a positive net financial position
The net financial position amounted to EUR 22.6 million as at September 30, 2017, and was therefore – despite the payment for the Lindor acquisition – back into positive figures thanks to the pleasing level of cash flows from operating activities. The equity ratio came to 57.8% at the close of the quarter.
Because of the acquisition and takeover of the Lindor business as at June 30, 2017 as well as the expansion of production capacity in India, the number of employees increased to 10,782 as at the end of the third quarter.
EBIT development / Moderate sales growth planned
The fact that regulatory costs are higher than last year continues to be a challenge. The implementation of the Medical Device Regulation will again incur considerable expenses in the fourth quarter and beyond, due among other things to the much more extensive technical documentation and the higher requirements concerning clinical evaluations. The further rise in price pressure in the HARTMANN GROUP's business segments and the fact that growth in the USA has fallen short of expectations are also factors with an adverse impact on earnings. For these reasons, the Management Board made a slight downward adjustment to the earnings target in September and now expects an EBIT for the 2017 year as a whole just slightly short of last year’s figure. Having said that, according to the Management Board’s assessment, HARTMANN is still expected to achieve moderate sales growth. The net financial position at the end of 2017 is expected to surpass the level reached at the close of the quarter.