Getinge reports a year of growth in 2015

Published: 2-Feb-2016

In spite of a Consent Decree from the US FDA and a comprehensive restructuring programme

Getinge Group reported a high level of activity once again in the final quarter of 2015. The firm says this quarter is usually its strongest and order intake grew organically by 1.2%, primarily driven by a 'very strong performance' in its Infection Control business, which includes disinfection and sterilisation equipment.

For the full-year, the Group’s order intake also rose organically by 1.9%.

Net sales displayed a positive trend, growing organically by 4.3% during the quarter, also driven by the strong performance of Infection Control, the firm said.

The Group also grew by 1.8% organically for the full-year compared with the year-earlier period and has now passed annual sales of SEK30bn (€3.2bn; US$3.5bn).

EBITA before restructuring, acquisition and integration costs fell in the quarter to SEK1.92bn.

Alex Myers, CEO and President of Getinge Group, said the firm was continuing to focus on its remediation programme to enhance its Medical Systems’ quality management system.

In the autumn, the firm saw 'several positive signs that we are on the right path', said Myers, including a successful FDA inspection of its new plant in Merrimack, New Hampshire in the US. During the quarter, a third-party inspection was also carried out in Hechingen, Germany, under the terms of the Consent Decree between Medical Systems and the US FDA put in place on 3 February 2015. The inspection indicated that additional measures needed to be implemented at the production unit, said Myers.

'We are in continuous and transparent dialogue with the FDA throughout the process and a more detailed analysis is currently being performed to determine the financial consequences that this may entail,' he said.

In parallel, the firm has made personnel changes in Hechingen and strengthened the local quality organisation by bringing in experts from its other sites.

We are continuing to invest in innovation and product development and in 2016 we will present a number of new products

The Group also expanded its product offering in its Infection Control business during the quarter and entered the low-temperature market with the acquisition of Stericool, a Turkish company, and also signed an exclusive global distribution agreement with Canadian company TSO3, an innovator in sterilisation technology for medical devices.

'We are continuing to invest in innovation and product development and in 2016 we will present a number of new, attractive products for the market,' said Myers.

Getinge also sold the loss-making manufacturing company MK Metallkomponenten, which specialises in metal processing, so as to streamline its supply chain and focus on the core competencies of its production activities.

The organisational changes are moving along according to plan and Myers said the firm established a new management structure at the beginning of this year to carry out the changes necessary 'to enable restored margins and reignited growth'.

Going forward, in the EMEA region, the Group expects 'slightly positive' growth, which is also its assessment of the Western European market. 'Slightly positive gorwth' is also expected in the Americas region, with demand in the North American market expected to increase slightly, while challenges in Latin America remain. In the Asia/Pacific region, growth prospects are expected to be favourable, with a particularly positive outlook for South-East Asia and India, although China remains difficult to assess, the firm said. Overall, volume growth is expected to be positive in 2016.

The financial consequences of the Consent Decree with the FDA, excluding the costs for the remediation programme, are expected to fall in 2016 compared with 2015 and will have a negative impact of approximately SEK130m on the Group’s 2016 operating profit.

Restructuring costs for the full-year 2016 are expected to amount to approximately SEK800m.

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