Recession-proof Eurofins doubles profits, forecasts further growth

The company announced yesterday that its net profits soared from €25m in 2010 to €57m last year on the back of food safety scandals in Europe, strong returns from strategic investments and organic growth as established operations gained greater market share.

Rolling out a list of impressive figures, the firm said that 2011 revenues had jumped 22% to €829m, with ‘clean’ EBITDA – including the cost of €4.4m start-up costs - climbing by a third to €147m.

Eurofins said it remained on target to break €1bn annual revenue barrier by the end of next year.

Accelerated H2 growth​

Perhaps as significantly, Eurofins’ operations in the second half of the year appeared largely unaffected by the economic downturn that has hit so many other industries.

Its Q4 revenues in the three months to the end of December rose 31% to €243m, while EBITDA for the period soared by 32% to €49m. Growth came both from existing and new acquired operations, it said.

Eurofins highlighted the investment it had made in its laboratory food testing facilities plus the added financial clout provided by recent non-food acquisitions in the US and France as key.

The acquisition of a testing laboratory in Nantes, France, was especially significant. The deal turned the facility into the world’s largest single food testing site and provided a major contribution “revenue growth acceleration, especially in the second half of 2011”,​ said the firm.

Food scandals​

The company said it had consolidated its position in food testing, expanding both market share and spend from existing customers – fuelled in part by foodborne outbreaks in Europe.

“The food contamination scandals in Europe alone during the year have further heightened consumer awareness, and have provided additional support to regulatory developments,”​ it added.

Economies of scale have also increased its leverage to improve rates of return and helped aid organic growth, both in established and emerging markets, said the firm.

As well as France the company said Germany, its largest market, posted double-digit organic revenue growth during the year, indicating large growth potential even in the group’s mature markets.

The firm hailed the results from developing markets as it forecast growth in these regions would increase.

“Eurofins’ newer markets continue to provide tailwinds for the group’s growth momentum, and trends suggest that these markets will continue to be a key growth engine for the group,”​ it said.

Group CEO Dr Giles Martin said recent investments made by the company had underpinned the strong results in 2011.

“It also supports our optimism and reinforces our commitment to achieve our objective of generating at least €1bn in revenues and €210m adjusted EBITDA by 2013,”​ he added.

Outlook​

Eurofins brushed off the recession as it foresaw more growth in 2012 and predicted “positive revenue and profitability outlook despite uncertain macroeconomic conditions”.

 It forecast revenues in 2012 of €900m and that it remained confident of breaking into nine figures 12 months after that, even without any major acquisitions.

“More importantly, the management believes that the Group has invested well in the last investment cycle (2006-2010), and has vastly improved its business mix to enable it to perform well regardless of the uncertain global economic conditions”,​ it said.