Sartorius Stedim Biotech cuts guidance citing hurricane, destocking and supply problems
The Paris listed bioprocessing tech firm made the revision this week, explaining it now expects 2017 revenue to be 4% higher than the €1.05bn ($1.2bn) it posted last year. Previously, it had predicted an 8% increase.
SSB’s revenue for the first nine months of the year was €806.5m, which is up 3.3% on the comparable period in 2016.
The firm attributed the growth to the expansion of its business in Asia and the positive contributions made by recent acquisitions kSep and Umetrics.
SSB contrasted this with its performance in other markets, commenting that: “While business in Asia performed very dynamically, demand was soft in the Americas and parts of Europe.
“This was a result of customer inventory destocking, the temporary interruption of deliveries from the company’s facility in Puerto Rico after Hurricane Maria, and ongoing restrictions of a partner’s capacity to supply cell culture media in North America.”
Sartorius Group CEO Joachim Kreuzburg told analysts on a conference call that disruption of SSB's activities in Puerto Rico had negatively impacted the firm's revenue by €7m in the third quarter.
He added that SSB's operations on the island have now resumed, explaining that electricity and transportation issues have been resolved and estimating that the minor repairs to the site cost "a couple of hundred thousand dollars."
Kreuzburg he also said SSB was rethinking how it will use the PR facility to try and prevent future supply chain disruption.
He also said all of the firm's biomanufacturing customers in Puerto Rico had been impacted by hurricane Maria, adding that most are close to resuming production.
Kreuzburg also confirmed that production disruption at the firm which supplies SSB with cell culture media cost it roughly €5 in Q3 and predicted a similar negative impact in Q4.
He added that the firm's culture media supplier is just about to restart production, explaining that sterility issues encountered by the manufacturer have been solved.
SSB's growth in Asia was driven by larger projects according to Kreuzburg, who said the firm's key customers are in China and Korea adding that it has also made gains in India.
He cautioned, however, that because SSB's growth in Asia was being driven by larger projects there is an increased risk of volatility.
Nevertheless, Kreuzburg said he is confident Asia will be a key growth market. He cited the region's large and aging population, combined with the increase in lifestyle diseases and the availability of medicines as drivers.
He also suggested political efforts to promote local drug production - particularly in China - will help the company grow its business in the region.