Espicom View: B Braun has generated record-breaking revenue in FY2013, its 175th year of operations. In FY14, the company's dialysis business will continue to outpace the market, and Espicom forecasts strong revenue increases in the company's Latin American business segment, as B Braun realises investments in distribution made in the region in 2013. Elsewhere, we forecast a return growth for Aesculap, as recent R&D investments begin to bear fruit.
B Braun has reported revenue of EUR5,169.5mn for FY2013, ended December 31 2013, representing year-on-year growth of 2.4% (EUR5,047.8mn in FY12). On a constant currency basis, sales increased by 5.8%. Consolidated annual net profit increased by 9.3% to EUR315.5mn, compared with EUR288.6mn in FY12.
Revenue by D ivision
B Braun's Hospital Care division supplies hospitals with products such as intravenous (IV) sets and accessories, IV and injection solutions, peripheral IV catheters and clinical nutrition, as well as pumps and the systems associated with them. Sales in the Hospital Care division increased by 2.6% to EUR2,474.4mn over EUR2,412.7mn in FY12. Demand for infusion therapy primary care products for hospitals (parenteral nutrition solutions and injectables, for instance) was particularly strong.
The Aesculap division focuses on developing and marketing products and services for core surgical and interventional procedures in operative medicine. While boasting to be the world leader in the provision surgical instruments and sterilisation technology, the company is also a major global supplier in the fields of neurosurgery and wound closure. The division reported sales of EUR1,444.2mn in FY13, which were flat compared with FY12 revenue of EUR1,442.5mn. When adjusted for currency effects, Aesculap grew by 3.9% compared with the prior year. Growth was particularly affected by currency fluctuations.
The Out-Patient Market (OPM) division is focused on the transfer of patients from one form of care to another, out-patient IV therapy, diabetes, skin and wound management, stoma and incontinence care, disinfection and hygiene. The division achieved sales of EUR609.0mn in FY13 over EUR606.2mn in FY12, which represented a marginal 0.5% increase. This compensated for the discontinuation of insulin production and the transfer of veterinary business to Aesculap. Wound care and incontinence care achieved above-average growth for the division.
The B Braun Avitum business is a full-range supplier of extracorporeal blood treatment. The division provides dialysis centres with all the products and services required for the blood cleansing processes of dialysis and apheresis. In FY13, sales in the B Braun Avitum business increased by 9.5% to EUR612.5mn (EUR559.2mn in FY12). Growth was primarily due to acquisitions and increases in the number of patients in the company's dialysis provider business within Germany and Russia.
Revenue by Geographic Area
In their local currencies, Latin America, Asia and Australia achieved strong growth. When converted into the euro, however, a more moderate 4.7% growth was seen in Latin America and 2.9% in Asia and Australia. In Europe (excluding Germany), B Braun experienced stable growth of 3.8% despite the persistently challenging market environment. Growth of 1.7% seen in Germany was comparable with the growth of the market as a whole.
In US dollars, North America saw sales grow by 2.1%, representing a slight year-on-year increase. In the Africa and Middle East region, growth was a dynamic 12.4%.
B Braun expanded its production capacities in FY13 in order to meet sustained demand. As part of this, the company completed a cross-divisional modernisation and expansion of its Penang site in Malaysia, made global investments in increasing capacities for IV sets, and started boosting the production of small volume parenterals in Berlin, Germany. B Braun also modernised its Tuttlingen, Germany site for its Aesculap division. In Sempach, Switzerland, the OPM division constructed a new production facility to increase production capacities for wound care and disinfection products.
The B Braun Avitum division further expanded its dialysis provider business through the acquisition and construction of 15 dialysis centres in Russia and 11 in Germany. B Braun also acquired a 15.08% holding in Rhön-Klinikum. Additions to fixed assets, intangible assets and financial investments, as well as additions to investments in associates and acquisitions of fully consolidated companies, amounted to EUR1,029.4mn (EUR588.5mn in FY12).
As of December 31 2013, B Braun had 49,889 employees worldwide, an increase of 7.0% over FY12. This increase was primarily attributable to an expansion of production, acquisitions and the foundation of new companies in a number of countries. In Germany, the number of employees increased by 5.6% to 12,726 (12,052 in FY12). This increase was largely as a result of new recruitment in the area of production and the acquisition of ViaMedis Nierenzentren. In January 2014, the number of employees worldwide exceeded 50,000.
Based on constant rates, B Braun anticipates profitable growth of between 3 and 7% for FY14. The company expects that the B Braun Avitum division will experience significantly stronger growth than the rest of the group.