FSMA preparation playing a role in strong US food testing market - Eurofins

By Joseph James Whitworth

- Last updated on GMT

Eurofins brings forward objective to exceed €2bn of revenues

Related tags Food testing Food

Eurofins has reported high single digit organic growth in the US for food testing driven in part by preparation for the Food Safety Modernization Act (FSMA).

Organic growth in the US, which comprised 34% of revenues in the first half of 2015, was above group objective.

The US Food and Drug Administration (FDA) requested an increase of $109.5m in the President’s Budget in preparation for FSMA implementation in 2016 and 2017.

Capacity doubled

The group will continue to ramp-up its local footprint, having more than doubled capacity in the last 12 months, with more to come on stream in 2016.

Eurofins has opened four new laboratories in different cities to support growth in food testing activities, in addition to the hub in New Orleans.

Separately disclosed items in H1 2015 were €-10.1m at EBITDA level, compared to €-18m for the period in the previous year.

Within separately disclosed items, temporary losses from start-ups and acquisitions in restructuring was reduced to €4.2m from €9.2m in H1 2014.

Remaining temporary losses are related to start-up food testing labs being opened in the US.

Eurofins is also bringing ahead by one year, from 2017 to 2016, the objective of reaching €2bn of revenues.

After doubling in size in five years, from 2007 to 2012 (€497m to €1.044bn), and in two years, from 2005 to 2007 (€233m to €497m), the group would have doubled in only four years if it meets the target.

Revenues in H1 2015 increased 31% to €842m on organic growth of about 6% and net profit increased 34% to €30.3m.

Dr Gilles Martin, CEO, said the group delivered close to 6% organic growth, above its 5% objective.

“Even more notable is the significant expansion in reported EBITDA margin, despite the dilutive impact of multiple start-up laboratories (mostly in the US) and the remaining businesses that are undergoing reorganization (Discovery Services, Benelux),” ​he said.

“Overall, as can be judged today I am positive that Eurofins should be able to continue to perform well in most of its markets, as well as consistently deliver profit improvements as we reap the benefits of our investments."

Europe performance

In France, where Eurofins derived 14% of total revenues, faster market share gains was reflected in the high single-digit organic growth.

As food testing volumes continue to grow, Eurofins said it is able to leverage its scale to accelerate market share gains with new and existing customers.

Growth in the German food testing business showed a slower start compared to strong comparable results in the previous year, which included the first full year growth contribution from the Danone outsourcing (see related news).

However, the group said it was reasonably confident growth should pick-up for the remainder of the year.

Growth from businesses in the Nordic region was below objectives following the completion of the large-scale site consolidation in Denmark. However, modest growth was still notable given the 2% negative currency impact.

The group is optimistic that growth will steadily ramp-up as underlying environment and food industry fundamentals remain solid. 

By the end of 2015, the group expects to complete 40,000m2 of additional laboratory surface, following the 60,000m2 in 2014.

In Europe, Eurofins is shifting several multi-building or multi-location laboratories in Germany into a single-site campus in Hamburg.

The group is consolidating a site to bring several small laboratories into two large sites in The Netherlands and Belgium and in Sweden, it is combining two laboratories into one larger site in Uppsala. 

Related topics Food Safety & Quality

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