Ambu A/S: Interim report for Q3 2020/21
Ambu’s revenue increased organically by 7% in Q3 and 16% for the year to date mainly driven by new product launches in Visualization and uptake in elective procedures in Europe and North America. Full-year outlook as of 1 July 2021 is maintained.
“We continue our strong growth trajectory on the back of our innovation and commercial execution. I’m proud of how the organization is responding effectively to the continued COVID-19 market volatility and supply chain disruption. As we continue to roll out our pipeline, we will emerge as the leading single-use endoscopy player,” says Juan Jose Gonzalez, CEO of Ambu.
Highlights for the quarter
Comparative figures for Q3 2019/20 are stated in brackets.
- Revenue for Q3 was DKK 973m (DKK 947m) based on organic growth of 7% (21%). Reported growth for the quarter was 3% (23%). Year to date, organic growth was 16% (20%), with reported growth of 11% (22%). Growth rates are significantly influenced by the high comparables for Q3 2019/20. Compared to Q3 2018/19, before the pandemic, the annual average organic growth rate was 14%.
- Sales in North America grew organically by 32% ( 10%), while we saw a decline in Europe of 10% (59%). Rest of World posted organic growth of 7% (31%). Year to date, organic growth rates were: North America 16% (7%), Europe 16% (38%) and Rest of World 11% (15%).
- Visualization sales were on par with the sales in Q3 last year, which means 0% growth (81%) as Q3 last year was a quarter with extraordinarily high Visualization sales. The annual average organic growth rate for Visualization compared to Q3 2018/19 is 36%. Year to date, organic Visualization growth was 29% (60%).
- Sales of single-use endoscopes reached 386,000 units in the quarter and 1,135,000 units year to date. Sales volumes were thus up 15% and 37%, respectively, relative to last year.
- Anaesthesia sales declined by -1% (-1%), while Patient Monitoring & Diagnostics (PMD) posted organic growth of 44% (-32%). Year to date, Anaesthesia was flat at 0% (3%) and PMD grew by 7% ( 10%).
- In early Q4, we submitted aScope™ Gastro and aBox™ 2 for FDA clearance, and the 1.5 version of the aScope™ Duodeno is progressing as planned with commercialization expected to commence in September 2021. Launch of aScope™ 5 Broncho is postponed to 2021/22.
- Gross margin for the quarter was 62.5% (64.7%). The gross margin year to date was 63.4% (62.2%). The declining gross margin is mainly driven by product mix.
- Capacity costs for the quarter totaled DKK 520m (DKK 457m), corresponding to an increase of 14%. The increase is driven by the overall expansion of capabilities to execute on our strategy. Year to date, capacity costs were up 22%.
- EBIT for the quarter was DKK 88m (DKK 156m) with an EBIT margin of 9.0% (16.5%). Year to date, EBIT ended at DKK 336m (DKK 399m) with a margin of 11.2% (14.8%).
- Net working capital-to-revenue ratio was 21% (17%) at the end of the quarter based on rolling 12-month revenue. We have continued to invest in inventories to build a robust supply chain and manage risk from the current increase in delivery time.
- Free cash flow before acquisitions totaled DKK -113m (DKK 187m) for the quarter and DKK 138m (DKK -92m) for the year to date reflecting the higher levels of inventory.
- Total net interest-bearing debt (NIBD) was DKK 638m (DKK 1,253m), corresponding to a leverage ratio of 1.1 (2.2). The reduced net interest-bearing debt is the result of the 1.86% capital raise (DKK 1.2bn) carried out in January. To reflect the reduced need for external financing, we have in the quarter renegotiated our external financing and signed a new 3-year committed agreement with our primary banks. Total credit lines available are now DKK 1,500m (DKK 2,300m) and the cost of financing includes sustainability targets as part of our ESG strategy.
- The outlook for the 2020/21 financial year was updated on 1 July 2021 due to slower than expected recovery of elective procedures and shipment delays. On this date, the 2020/21 outlook for organic growth was lowered from “17-20%” to “approx. 17%”, and the outlook for EBIT margin was lowered from “11-12%” to “approx. 10%”. The guidance for total number of endoscopes sold was upgraded to exceed the previous upper end of the range from 1.3 to 1.4 million units. At the end of Q3 2020/21, we repeat this updated outlook for 2020/21 as follows:
- Organic growth of approx. 17% with growth in Visualization above 30%
- EBIT margin of approx. 10%
- Sales of single-use endoscopes of more than 1.4 million units
A conference call is held today, Tuesday 17 August 2021, at 09.30 (CEST). The conference is broadcast live via ambu.com/webcastQ32021. The presentation can be downloaded immediately before the conference call via the same link. To ask questions in the Q&A session, please call one of the following numbers five minutes before the start of the conference: +45 3544 5577 (DK), +44 333 300 0804 (UK), +1 631 913 1422 (US), and enter the following access code: 70000017#.
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