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Stratec Biomedical 9M Profit Down; Backs FY18 Weak Outlook; Sees Growth In FY19

STRATEC Biomedical AG (SBSG) reported Thursday that its nine-month earnings per share plunged 62.8 percent to 0.51 euro from 1.37 euros last year.

Adjusted consolidated net income was 13.60 million euros, compared to 19.17 million euros a year ago. Adjusted earnings per share were 1.14 euros, down 1.61 euros last year.

Adjusted EBITDA dropped 25.8 percent to 21.96 million euros from prior year's 29.59 million euros. Adjusted EBIT of 17.0 million euros dropped 30.5% from last year.

STRATEC generated sales of 134.6 million euros in the first nine months of fiscal year 2018, down 9.9 percent from previous year's 149.4 million euros. Organic sales decline was 4.8%.

Further, the company said assumption of significant upturn in growth momentum in fourth-quarter 2018 and 2019 as a whole is confirmed by latest developments.

Annual savings potential of 2.0 million euros to 3.0 million euros is expected from 2021 onwards.

Looking ahead, STRATEC confirmed the adjusted financial guidance, still expecting sales to decline organically in the low- to mid-single-digit percentage range in fiscal year 2018. In light of diseconomies of scale and rising costs in connection with the development pipeline, which continued to grow significantly in 2018, STRATEC expects the adjusted EBIT margin to be lower compared to the previous year and to amount to around 11% to 13% in fiscal year 2018.

Further, STRATEC expects to return to significantly positive organic sales growth in 2019 based on the large number of forthcoming product launches, the partial postponement of sales originally expected in 2018 to subsequent periods and current customer order forecasts.

The associated economies of scale and initial positive effects from the defined earnings improvement measures are expected to result in a significantly higher adjusted EBIT margin in 2019 than in the previous year.

Due to the planned conversion and expansion activities at the Birkenfeld location, investments in 2018 are expected to be slightly higher than in the previous year.

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