Good day, and welcome to the Sartorius and Sartorius Stedim Biotech Conference Call on the Preliminary Full Year 2020 Results. Today's conference is being recorded. At this time, I would like to turn the conference over to Dr. Joachim Kreuzburg, CEO. Please go ahead, sir.
Thank you very much, and welcome everybody to our today's call and our preliminary results for 2020. As always, at this time of the year, together with Rainer, our CFO, we would like to inform you about the preliminary results of last year, and in addition to that, also give you guidance for the year 2021. This time, as we already announced half a year ago when we talked about our half-year figures for last year, we will also give you an update on our midterm ambition for the year 2025. We will do that first for the Sartorius Group, and thereafter directly present on the Sartorius Stedim Biotech set of numbers in all those three dimensions. After that, we are happy to take your questions.
With that, I just would like to kick it off by walking you through the main highlights that describe the year 2022, which was a very special year, I think, for all of us. We have seen a very strong finish to the year in both group divisions. We have achieved, therefore, as a result from that, double-digit growth really in all KPIs for both divisions, indeed, order intake growth, sales revenue growth, as well as EBITDA expansion. Nevertheless, business was very different for the two divisions in the course of the year. Maybe the fourth quarter was quite similar for both divisions, but when we look on the entire year, then Bioprocess started with quite a nice momentum, which then significantly accelerated in the course of the year after the first, and then increasingly, orders came in from vaccine developers and manufacturers.
In contrast to that, in LPS, we had a very difficult first half of the year. The first quarter was very much impacted by the full lockdown in China, slow but constant recovery in China, but again, a slow one at the beginning. In Q2, we have seen really a difficult business environment in the Americas because at that stage of the pandemic crisis, many customers, laboratories in the U.S., were also fully locked down. Both divisions then, of course, also benefited to some extent from the acquisitions, particularly the one of the different Danaher businesses that were closed starting May 1st, basically, or consolidated from May 1st of last year onwards. Rainer will give you all those numbers in a minute.
I then also just want to tease you on the fact that we continue to project very significant growth also for the year that just started, and that we have significantly updated and raised the target for 2025. A little bit more in a couple of minutes. With that, I hand over to Rainer.
Yes, thank you, Joachim. Hello, everybody, and also welcome from my side to today's call. As Joachim pointed out, we're looking back to quite a demanding but also very successful year. How is this reflected in our figures? Sales revenues rose to EUR 2.3 billion compared to 2019. That is an increase of 30%. 7 percentage points of that growth are really contributed by the acquisitions, major or basically all of it from the Danaher assets that we purchased May 1st, as Joachim just pointed out. An additional 8 percentage points are attributed to, let's say, corona pandemic effects. Order intake rose overproportionally by 49% to EUR 2.83 billion. Here, we actually—how is that comprised? Acquisitions basically contributed here around 11 percentage points. The corona pandemic impact here is a little bit—actually, it's double as in the sales figure. It's around 14 percentage points.
Of course, these are always best estimates from our side. The strong revenue, of course, trickled down to quite an impressive increase in our underlying EBITDA. It rose by 39% to EUR 692 million. That's an increase of 2.5 percentage points to 29% EBITDA margin. Let's keep in mind here, though, that, of course, there were significant economies of scale, but also an underproportional development, especially in our functional expenses. We have been pointing that out during the last two quarters, and that we should always keep that in mind, specifically also when Joachim's talking later about the guidance. FX actually did not play a major—was slightly diluted. Sorry about that. But acquisitions actually only had a slight positive effect on the overall group result. How does it translate to our earnings per share on the ordinary side? It's EUR 4.37, so an increase of 43%.
The preference shares, EPS, is always one cent higher to EUR 4.38. If we look on how the revenue was split around different geographies on the next slide, we see really very consistent pictures. Basically, each reaching around 30% growth. Revenue increase, let's start with the Americas. Here, revenues rose to EUR 812.2 million, increase of almost 33%, of course, driven heavily also by the bioprocessing side, which I can already say that. This has been a consistent picture throughout the year. BPS is a driver in all regions, clearly in Americas also by the development of the corona vaccines. LPS contributed here as well, but mainly, of course, through the impact of the acquisitions. In EMEA, we have an increase of 28.4% to EUR 935 million. Of course, here also, the vaccine development plays a large role, and we had some nice tailwinds from this.
Also on the LPS side, we actually saw—and Joachim mentioned it upfront and walked us through the development of the year—a quite solid performance considering the overall economic challenges that we were faced with throughout 2020. Asia-Pacific did very well as well, 29.6% increase to EUR 588 million. BPS was here the strongest momentum, not only on the sales side but also on the order intake side. On the Lab Products & Services side, we saw quite some improvement in specifically Q3, Q4 compared to the first half of the year when, yeah, there was quite a tight lockdown, especially in China, which then resulted in some catch-up effects towards the end of the year. If we look on the right-hand side, the sales by region donut, and if we compare to last year's, to be honest, no change. EMEA continues to contribute 40% to the overall group revenue.
America is 35%, and Asia-Pacific was 25%. If we look on the next slide and dive a little bit deeper into the divisional performance on the bioprocessing side, dynamic growth really across not only all regions but also all product categories. Order intake, to be honest, we have to say soar to 56.4% in constant currencies to EUR 2.2 billion. That is quite impressive. The corona impact on that order intake is around 17 percentage points. From acquisitions, actually, we have around 8 percentage points. On the revenue side, 34.4% in constant currency growth to EUR 1.78 billion contribution here. Corona, 12 percentage points, and the acquisitions contributed here as well, but underproportionally was only 5 percentage points.
Both, of course, as I mentioned before, and if you know that BPS is the profitability driver here on the group, we see an improvement in the margin from 29.1% to 32.3% for BPS to EUR 576 million almost, which is an increase of 46.5%. Also, please, let's keep here in mind that the economies of scale played a role, and also the underproportionate development of functional expenses. Basically, as we all knew, and this applied also to Sartorius, pretty much no trouble through 2020. A lot of the hiring could not have taken place normally as it should have needed also in support and sales and marketing functions in order to sustainably accompany this growth path, of course, slightly offset by some additional freight expenses.
Overall, the cost basis is a low one, of course, that brought us then to this, yeah, very, very high or very good 32.3%. FX, slightly diluted. The acquisitions actually did not play any significant role overall onto the EBITDA for the BPS division. If we look at the LPS development, the phrase is here really rebound and catch-up effect after challenging first half. As we know, if we look back at half year, we were pretty much order intake as well as revenue was flat on previous year level. We saw Q3 that we commented already an acceleration, and that continued in the fourth quarter. That order intake for the whole year increased by 26.4% to EUR 598 million was also driven by high demand for product use in the context of coronavirus testing.
Specifically here, we have, for example, on the liquid handling side, the tips for the pipettes, but also membranes that go into certain test kits. The acquisitions contributed here on the order intake side just with an inflation around 19 percentage points. Revenues, same development overall. We saw a good catch-up in Q3, Q4, increased by 18.1% in constant currencies to EUR 553 million. Acquisitions contributed here, of course, 15 percentage points. The corona net effect, we saw here a slight dilution of 1 percentage point. Underlying EBITDA margin, we could not hold the margin that we showed last year with a slight drop of approximately 0.5 percentage point to 21% or EUR 116.3 million, but net increase.
Let's keep in mind 2 percentage points are really coming here from the acquisition from the Bio product portfolio that came with the acquisition of the Life Science assets from Danaher. In addition, we should keep in mind that also by the impact of the lower demand, also throughout the first six months, which we pointed out several times, we definitely had a lower capacity utilization, which also then led to a decrease of the margin overall. FX really did not play any major role on the LPS side. The next slide, if we look as always to some key financial indicators. I mentioned EBITDA, strong performance, EUR 692 million. Yes, we had quite some significant increase in extraordinary items.
They are, of course, driven and influenced primarily by the acquisitions, not only by the Danaher Life Science assets May 1st, but of course, also by initial activities regarding DS separations and in that case. Financial results, you see here, net a quite significant drop. Actually, I want to spend some time to explain what is happening here. We should see normally a drop from EUR 32.5 million expense to only EUR 9.4 million, which is, of course, initially a bit counterintuitive knowing that we are financing more, especially those acquisitions. In this number, there is a valuation effect included from the earnouts in relation to the acquisition of DS separations. We will see this going forward every quarter in our figures that we are going to publish.
That effect, since the earnout is related to a certain amount of shares that are going to be given to the sellers of DS separations, and this is happening over the next five years, we actually have to value that liability that we owe still to the purchaser at fair market value. Of course, since the share price is here relevant and we see fluctuations in the Sartorius Stedim Biotech share price, this is reflected then in the P&L and has a significant impact, therefore, in the financial result. Going forward, of course, we'll always mention that. Just for you, here in 2020, in those figures, this effect amounted to EUR 31 million. If you basically adjust that, then you see a financial result of EUR 40 million, which is in line and mainly driven, of course, by an increase in our recurring interest expense.
In addition, let me make a comment, although we do not have it normally here, but since we guided in Q3 also that our tax rate overall would be around 30%. Currently, our tax rate that we are publishing is 28%. That has to do with the fact that it includes the positive impact of the valuation of the earnouts, which, though, is not tax relevant since it is purely a valuation entry. If we exclude this effect, our tax rate would be 30.2% and therefore exactly in line with the guidance and projection we actually gave in Q3. Not an easy topic, but if there are questions later on, more than happy to discuss this further. Underlying net profit rose almost 43% to EUR 299 million. Reported net profit, 44% increase to EUR 226 million. The operating cash flow, of course, driven by the very strong EBITDA, increased almost 38% to EUR 519 million.
The net operating cash flow, of course, although you see and you will recognize that it's not only driven by acquisitions, working capital increase, but also through the fact that we want to make sure that our supply chains are intact as much as possible. Inventory levels, of course, increased. Receivables increased as well due to the strong growth in revenue. That effect actually could be counteracted by the increase of our factoring program that is now running at almost EUR 120 million by year-end. The change from 2019 to 2020 was roughly EUR 90 million increase in our factoring program. That's what we use as a financing source. Investing cash flow, EUR 1.28 billion, of course, driven by the acquisitions. The CapEx ratio is in line with the guidance we said, around 10%. We ended up with 10.3%. That's 2 percentage points less than previous year.
Nevertheless, if you look at the nominal value, it was still EUR 240 million compared to EUR 225 million in 2019. If we look on the next page and have a look at the equity ratio in %, we see here a decrease of the ratio from 38% to 29.9%. I comment that on already Q3 figures. Of course, nominally and in absolute terms, the equity is increasing. In 2020, we saw an increase in equity of EUR 300 million. The ratio nevertheless decreases due to the fact that through the acquisitions and the balance sheet sum increased net by EUR 1.8 billion. Therefore, the ratio from equity to the balance sheet sum, of course, decreased, but still at very acceptable levels.
Net debt driven by the acquisitions at EUR 1.88 billion, which results then in the dynamic debt-plus ratio of net debt divided by underlying EBITDA of 2.6, also where we guided it, where we said, "Okay, it will be slightly below 2.7." On the right-hand side, you see the development. Everything in line and where we wanted it to be. As I said, very successful year in 2020. I'll hand over back to Joachim.
Thank you, Rainer. Before I walk you through the outlook for 2021, I would like to share some information with you with the most recent acquisition and one agreement about an acquisition that we have closed. All this happened in December and early January. The first one is the acquisition of WaterSep BioSeparations, a rather small company from the U.S. East Coast, $2.5 million sales revenue, 15 employees.
We had the date of first consolidation, as you can see, mid of December. It is an innovative hollow fiber cross-flow filtration technology. It also adds to our downstream processing portfolio. It will be consolidated in the BPS division. Purchase price is $27 million plus an earnout, depending on the achievement of quite ambitious growth targets. It is a complementary technology to our existing portfolio. As you can read from the rather small team of this company, we see here a substantial potential to grow this business significantly as it is now part of the product bag of a globally present, quite strong sales organization with good access to those customers. The second one is the chromatography process equipment division from the French company NovaSep.
We are talking about approximately EUR 37 million of sales revenue that this business should have achieved in 2020, approximately 100 employees being active in this business. We expect that closing could take place within H1. I think that rather would mean in the second quarter, more likely than in the first, for sure. It's a resin-based batch chromatography as well as intensified chromatography systems business. Again, would be part of the BPS division and would add to our downstream portfolio here. We didn't disclose the purchase price yet as we have an antitrust approval to wait for. Once we will have got this, then we will share more information with you about this business as well. Having said that, I would now like to talk about the outlook for 2021.
First of all, I would like to remind everybody that also in our business, which is obviously very resilient in these challenging times, uncertainties remain relatively high. We have heard about the very different two halves of last year, particularly in the LPS division. We are working on the assumptions that there will be no further tighter lockdowns in any geography, particularly in relation to our guidance for the LPS division. Of course, that always, yeah, as I said, it comes with quite some uncertainty. We reflect that with an even wider bandwidth for our top-line growth guidance than we usually would give. We are projecting 19%-25% growth in constant currencies for the group. Of this, 5.5 percentage points should approximately come from the acquisitions. We also expect up to 6 percentage points from corona-related demand.
As you can see further down, that this would come completely from the BPS division. I come to that in a minute. We expect an underlying EBITDA margin of 30.5% for the group. Overall, I would also like to make you aware of the fact that we expect not a very linear growth over the different quarters of next year. We expect growth to be for Q1 a good 40%, rather, and for H1 approximately 40%. Right? That, of course, has to do with the fact that particularly the Danaher business was consolidated just starting from May last year onwards. The fact that also the, let's say, underlying organic business, as we talked about before, had quite some trend last year, so that there are different comms also in that regard.
These group figures are composed of the numbers, of course, that we expect for the two divisions. For Bioprocess Solutions, we expect 22%-28% top-line growth. Approximately 6 percentage points should be contributed by the acquisitions and up to 8% from the additional corona demand. EBITDA margin is expected to be around 33%. Here, I would like to refer again to what Rainer elaborated on, and that is that, and I think we spoke about that already three months ago, that I think the development of our profitability should rather be seen as one for two years. Yeah?
Maybe it's better to say, okay, from 2019 to 2021, this profitability increase for these two years should be put into relation to the top-line increase of these two years because of this certain level of lagging behind in developing some of our infrastructural costs, so to say. For Lab Products & Services, we expect a top-line growth of 10%-16%. 5 percentage points we expect to come or to be contributed from acquisitions or more precisely the Octet business that we acquired last year from Danaher. We do not expect any net impact from corona effects, as I said before. The acquisitions should have no significant effect on the profitability of BPS and also on the group level. Whereas for LPS , we expect a rather small one of approximately 0.5 percentage point of accretion. CapEx ratio is an important point here as well.
We have mentioned that in our communication earlier today that we are accelerating and also extending a number of our capacity expansion plans that we had on our agenda for the next few years anyway. That, of course, is completely related to the fact that we have been growing stronger in 2020 than initially expected and that we also expect that to some degree to happen in 2021. That, of course, means that we have approached the trigger points in regards to capacity utilization much faster and earlier than we initially had expected in some areas as there are membrane casting capacities, filtration manufacturing, bag manufacturing, also to some extent in our equipment business. Numerous projects that we have pulled forward.
That means that other than we have expected a year ago that the CapEx ratio for 2021 should be rather like a little bit lower than this 10% that we have now achieved in 2020, which we also had projected at the beginning of that year. Just the opposite, we will see around 15% of CapEx ratio because of that. No change of content, so to say, but really like a compression in time of a number of such projects because of the reasons that I was talking about. For debt to underlying EBITDA, we expect that even though we are planning for this very substantial CapEx, we rather expect a slight improvement of our indebtedness key figure, the net debt to underlying EBITDA ratio. We project that to come in slightly below 2.5 after 2.6 for 2020.
Of course, all this is excluding any potential acquisitions beyond those communicated. With that, I would like to switch over to the 2025 perspective, as said earlier. We increased, oh, we have seen that the baseline has substantially increased now. We initially thought that we would come in pretty much on this EUR 2 billion figure that we had projected for the year 2020 for a long time. Additionally to that, we also see that in the BPS business that there should be maybe a bit higher underlying organic growth also for the next few years. Because of that, to some extent, you could say we stick roughly to our initial yardstick of doubling our sales revenues every five years.
Because of the certain increase of underlying organic growth potential and opportunities in the BPS division, we've gone a little bit beyond that and have risen now our top-line guidance from EUR 4 billion - EUR 5 billion for the year 2025. I also would like to say that one thing is very much unchanged, and that is that this additional sales revenue should be achieved by predominantly organic growth, but also acquisitions. We would expect on the group's level roughly a composition of 75% - 25% with maybe a ratio a little bit more towards the non-organic portion for LPS and maybe the opposite for BPS. That has been the case for our guidance for 2025 before as well.
Just as the one regarding acquisitions, given the profitability level that we are operating on, we believe it's a more realistic assumption that acquisitions are rather dilutive at the beginning on average and then reach the actual profitability level after some time. I'm mentioning that because if we would plan for just organic top-line growth, then maybe EBITDA levels would be a little bit higher than we project them. The set of figures looks like the following. I mentioned already the EUR 5 billion for the Sartorius Group, but let me start from the left side. For BPS, as we came in very significantly above our initial target for 2020. As a reminder, initially we thought we would achieve EUR 1.5 billion, and now we came in close to EUR 1.8 billion.
Therefore, this is very much reflected by now the increase to EUR 3.8 billion as our target for 2025, an ambitious but achievable target. The EBITDA margin, we would expect to be around 34%. For LPS, we did not change the figures. We still believe it is an ambitious, equally ambitious, but a realistic target as for BPS. EUR 1.2 billion of sales revenue is 25% of EBITDA margin. Both growth ambitions translate into a CAGR of around 16%. For the group, as I said before, we are talking about EUR 5 billion of sales revenue that we aim to achieve in 2025 and an EBITDA margin of 32%. Let me briefly walk you through the set of numbers for Sartorius Stedim Biotech before we then move to Q&A.
For Sartorius Stedim Biotech, again, of course, the numbers are very much comparable to those for the Bioprocess Solutions division, even though we see some increase of difference between both top-line and to some degree also profitability margin top-line because the SSB is manufacturing some products that are sold through the LPS division. This business is growing as well. We are talking about membrane-based products here. Profitability, the main reason is here, one that is not relevant for cash flow, actually, but it is simply an accounting topic that depreciation for investments made on the group level can be accounted for as depreciation in the BPS division, but have to be accounted at costs that the SSB entity, the legal entity, is compensating. That is why the EBITDA, so the result before such depreciation, is a little bit higher for BPS than for SSB.
This is reflected both in the actual figures as well as in the 2021 guidance as well as the outlook for 2025, as you will see in a minute. Sales revenue for 2020 was a little bit above EUR 1.9 billion, reflecting a 34.5% point of growth in constant currencies. Order intake came in at 56.7% in constant currencies, above previous year's number, and reached EUR 2.38 billion. Underlying EBITDA was close to EUR 605 million, representing an increase of more than 40% and an expansion of the margin of close to 2.5 percentage points and reaching a level of 31.7%. Underlying earnings per share increased even a little bit above that rate, almost 46% up to EUR 4.16. All the different effects Rainer spoke about earlier regarding the pandemic-driven effects here on the SSB level, this accounted for around 12% for sales revenues.
You see that in the second bullet point, around 19 percentage points for order intake. For sales revenue, the acquisitions accounted for close to 6 percentage points of the growth. Underlying EBITDA, I do not want to bore you with repeating ourselves, economies of scale and this delay of cost development. On a regional level or from a regional perspective, also pretty much as you have seen it just before, we are very happy that growth was very evenly distributed across product segments and regions. It just varies between 33% for the European region and 38% for Asia-Pacific and the other comments I guess you have heard before. With that, I would like to move to the operating cash flow perspective. Also here, the comments you basically have heard before. Therefore, again, I would rather like to leave more room also for Q&A and therefore rush through that.
Tax rate, Rainer elaborated on that. We are happy to share all those details going forward to offer all the transparency that you need also for your models. With that, I would like to move over to the financial KPIs, very healthy equity ratio, of course, very much influenced by the acquisition. The same holds true for net debt and net debt to underlying EBITDA. A ratio of 0.8 still represents a very strong position in regards to further financing capacities. Outlook 2021. Also here, we, of course, apply a 6% bandwidth due to the relatively high level of uncertainties. 20%-26% top-line growth is our expectation here. Acquisitions, we expect to contribute around 5.5 percentage points to that, and the additional corona demand should make up around 7 percentage points.
Because of the effect that I was talking about before, our projection for the underlying EBITDA margin is around 32%. You see also that we plan for a CapEx ratio of 15% here on the SSB level as by far majority of the significant capacity expansions are taking place on the SSB level for our respective business. They are main locations: Germany, Puerto Rico, and China, where we expand our footprint and potential. 2025 ambition, all the background I mentioned before, do not want to repeat that. It simply translates into a EUR 4 billion sales revenue target for Sartorius Stedim Biotech. Maybe one comment: we didn't differentiate that number three years ago when we came up with our 2025 guidance first time because we just said, "Well, let's don't try to be over-precise seven years ahead of time or eight years ahead of time," basically.
Now, for the reasons that I mentioned before, there is some difference between those two top-line numbers, and that is why we reflect that here transparently. It is a little bit more than EUR 120 million or so at this point in time. We expect that difference to grow to around EUR 200 million by 2025. That is why we are projecting EUR 4 billion for SSB, whereas we are projecting EUR 3.8 billion for BPS. EBITDA margin, I explained that before, we expect to be around 33% for SSB in 2025. Thank you for your attention so far, and now we open the line for questions.
Ladies and gentlemen, at this time, we will begin the question-and-answer session. Anyone who wishes to ask a question may press star followed by one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star followed by two.
If you are using speaker equipment today, please lift the handset before making a selection. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. The first question comes from the line of Daniel Wendorff with Commerzbank. Please go ahead.
Yes. Good afternoon, everyone, and thanks for taking my questions. I'll start with two, if I may. The first one is on your underlying order growth in BPS in particular. That looks as if there was also a positive trend quarter on quarter when you look at the order intake growth, excluding the corona effects. Can you give us a bit more detail here on that side? The second question is on the additional CapEx spending you planned for 2021. Can you provide a bit more detail where that money will go to?
How should we think then about CapEx spending beyond 2021 if you basically pull forward a few of the investments you've planned anyway?
Thank you. Yeah. Thank you for your questions. Order growth, BPS, it was quite significantly impacted indeed by the trend, or not the trend, but the additional demand from manufacturers of vaccines. I clearly would say that you are absolutely right. It's even stronger pronounced than the sales revenue growth, of course, as those orders by far not all were executed in 2020. That's why we carried over quite some orders into 2021. By the way, fully in line with customer expectations, our delivery times are very healthy, I think, also in comparison to the market environment overall. Clearly, the driver here has been corona demand, and that means predominantly vaccine demand driven.
For CapEx 2021, maybe a quick run through the most significant ones. Germany, in Göttingen, we have just started to break ground for a significant expansion of our membrane casting capacities. By the way, we are also in the middle of an expansion of our R&D capacities here, but that was nothing influenced by what I was talking about before, but still an expansion going on here. We will also, with quite some likelihood, start an expansion of our filtration capacities here in Göttingen. Also in Germany, we have started now already a significant expansion of our capacity and overall footprint in the equipment business, which is mostly bioreactors. The hardware for the bioreactors is manufactured here, yeah, to quite some extent. I move to Puerto Rico. Here we are extending both our bag manufacturing as well as filtration manufacturing capacities.
As a reminder, we have built the infrastructure that enables us to do so quite quickly during our massive expansion that we finished in 2019. The buildings are available for that, nevertheless, we are now putting in the clean room equipment and the manufacturing equipment into those spaces. We are also building a significant capacity for cell culture media manufacturing. This is in relation to our media business or to the media business that we have acquired in Israel at the end of 2019. We are expanding the capacities there in Israel as well to some extent, but we are now kicking off or have started to kick off a really very significant expansion of capacities in Yaoko. To be very transparent, it was our plan to do this anyway. This is a case of an extension of what our initial plans looked like.
In China, here again, extension and acceleration. We have started to produce single-use bags in China a while ago. You might remember that we said that this is on our agenda to build up some footprint for manufacturing of single-use products there as well. What we are doing now is a very significant expansion of that manufacturing capacities. We will also add, and that is the new. The one is really an acceleration and expansion, and the other one is even a new manufacturing on the same site, clean room capacity for filtration equipment manufacturing. There are a few more than that, as you can imagine probably. For example, in Korea, we are extending our footprint significantly and will add even there some assembly capacities for single-use devices. Korea is really a hotbed of bioprocessing, Samsung, but not only Samsung, also other players.
We are building a facility right next door to Samsung in Songdu. That would be maybe the highlights on that end.
Thank you very much. The question on CapEx spending beyond 2021?
Sorry for that. To be honest, I would hesitate to give you a number. As you can imagine, more or less all of those expansions will not be completed in 2021. We will talk about that for sure one way or the other and to some extent also in 2022. Where that number will exactly be then in 2022, bear with us a few months.
Thank you very much. I'll jump back in the queue.
The next question comes from the line of Richard Vosser with JPMorgan. Please go ahead.
Hi. Thanks for taking my question.
Just thinking about the order book, obviously, as was mentioned, very high order book growth in the last two quarters of the year. Just thinking about the timing of realization of that and whether that's changed, whether there's some slowdown in realization on that, or whether it's all in that first half scheduling that you mentioned in your call. Secondly, you mentioned just now delivery times very healthy, but maybe you could just talk about your capacity and how constrained you are in terms of growth. Is there a sort of a maximum level of growth that you can achieve with your capacity as it is now? Final question just on the midterm guidance in terms of your expectations for the COVID-19 bolus.
Are you assuming that that's sort of washed out in 2022/2023, or is there now some sustainable element to that business given what we're seeing with the different strains of COVID and different vaccine components that some of the players are announcing, different boosters, etc.? Thanks very much.
Yeah. Thank you very much. On your first question, order book, indeed, when you do the math and use full years numbers, then one can say that the order book that we have currently represents something like maybe seven months in contrast to five months that usually was the case in our Bioprocess Solutions business, right? That's definitely the case. Don't misinterpret that as that our average delivery times would be extended by two months or so. That's definitely not the case. It's just what the value of the order book represents.
From that, you can already derive that for sure not all of this order book is related to H1 sales. That is definitely not the case. It even goes partially beyond 2021, right? Most of the order book is for 2021, but not even all of that. Delivery times are healthy, but of course are challenging, clearly. We have added shifts even beginning of Q2 last year, very substantially. We do everything we can to increase our output by all those operational measures that are at hand and optimization that is possible. We do see the guidance that we are giving here for 2021 as definitely feasible. We do not have any doubts here. I should add here, of course, always provided that supply chains remain intact. There is a level to or there is a limit to the sphere that we can influence, of course.
Yeah. I mean, it's clear to everybody, but I just want to mention that. Of course, looking beyond 2021 and even without having a clear idea where growth should be for 2022, we will need certain of those capacity expansions that I was talking about before. That is why we really are not when we say we accelerate, then we are talking really partially about high-speed projects. When I think about how fast we are developing now the expansion of our membrane casting, which is always a time-consuming exercise normally, and also the other. We definitely will need capacity expansions beyond 2021. For 2021, we feel comfortable provided supply chains remain intact. You have, of course, a very good question regarding, okay, what about the midterm effect and influence of COVID-19-related business, vaccines, etc.?
As you can imagine, we have worked with a set of possible scenarios. To some extent, we believe there might be an offset. Difficult to model. Of course, there is no limit to fantasy here. If we remain to be stuck in a certain kind of pandemic situation, because if we imagine that something like every six months, maybe even people need to be vaccinated, the question is, okay, what would that really mean going forward in many respects? If in such a scenario, one would have to question what would that mean for the product pipeline for other fields of indication? There will be also a limit for the sheer size of healthcare systems and the sheer amount of spendings that would be possible for pharmaceutical goods.
I hope you do not get that wrong as to be a too conservative or too negative statement. Not at all. You know our guidance. We believe that it would be a very aggressive idea to say, okay, there are all those monoclonal antibodies, all those stem cell-based therapies, all gene therapies in the pipeline. They all come through fantastic growth on that. Still on top of that, we have corona vaccines full throttle. I think that would be a not too realistic scenario. I believe one way or the other, there will be a certain level of offset. That is, I believe, what is reflected in our guidance.
Very clear. Thank you very much.
The next question comes from the line of Patrick Wood with Bank of America.
Please go ahead.
Perfect. Thank you very much for taking my questions.
I'll keep it to two if I can, please. On the 2025 guide, maybe to ask a question from the LPS side. I appreciate you guys haven't changed that. Just curious on the M&A side. It obviously packs in quite a bit of planned deals on that side. I'm just kind of curious, any update on your thought process on the kinds of assets you're looking for and whether that's changed recently? That's question one. Question two is similarly connected. You're putting a lot of effort into building up the downstream exposure for you guys. Obviously, it's been a lighter area. Certain verticals within there, you've got a couple of companies with extremely dominant market shares. I'm just curious strategically how you're thinking about downstream and the ability to either take share or grow the market on that side.
Thank you for your question. On the first one, I would say pretty much no change of our ideas and our line of thinking there regarding LPS M&A. We are focusing on extending our relevance and our footprint in the life science research segment, which is starting to become the dominant segment in our LPS division as we have planned for. Within that life science research, the position that we have built now is to be a player with quite some relevant portfolio, innovative portfolio in the field, what we call bioanalytics, cell analytics, now with the offset portfolio, also protein analytics. We believe that complementary to these technologies, these offerings, there is quite some room for additional innovative technologies. We would be always favoring assets with a decent portion of consumables or recurring revenue for sure.
Of course, it's not really about writing a wish list maybe too much. It's very much rather the field, as I mentioned. Of course, we are always rather looking for innovative technologies that help us to further differentiate our offering in that field. You are absolutely right that in downstream processing on the bioprocessing side, there are dominant players or in particular one dominant player. What we clearly see is that this is a field where innovation plays a significant role. Our customers are very much interested in increasing the efficiency of downstream processing. In addition to that, because that is what I just said related maybe to monoclonal antibody manufacturing mostly.
When we then think of other modalities, gene therapies, for example, then really even a different kind of chromatography technology is necessary as the one that we have acquired when we closed the deal with BR in October last year. I believe this is not just a business where it is about sheer size. I think it's increasingly about innovation. We definitely have a position to sell these kind of products successfully to our customers. Hope that answers your question. Yeah.
Yeah. Makes sense. There's plenty who are annoyed with the downstream bottleneck. I totally get it. Thank you.
The next question comes from the line of Marcus Gola with Stifel Europe. Please go ahead.
Great. Thank you and good afternoon. My first question is also vaccine-related. And it's a bit the difference between adenovirus-based vaccines and mRNA vaccines.
I believe that the adenovirus-based type could outgrow, at least volume-wise, the mRNA going into 2021 and 2022, given the more attractive pricing. I believe also the adenovirus require more product from the single-use industry. Is it fair to expect that this could be a sequential driver for your single-use products in the course of 2021? My second question is on talent acquisition. It seems that at least the CDMO industry is increasingly struggling to find the required workers for the growth projects. I wonder whether you see the same challenges in your industry, and can we expect an increased labor cost inflation over the next few years in your business? Thank you.
Yeah. Thank you very much to really relevant aspects that you are addressing here.
The first one, you are basically right because of this volume aspect when you compare adenovirus-based vaccines to mRNA-based vaccines. No doubt about that. The question where unfortunately our crystal ball is still too foggy is indeed how it will play out in the market. Yeah. Very, very difficult to tell. Because again, yeah, I would fully agree. It is definitely one of the realistic scenarios, but really difficult to say how this will look like in whatever, six months from now or so. I am sure we will continue to discuss this in our upcoming calls. However, we believe that our exposure to any influence from that is at least limited in so far as we are involved in quite a very healthy set of vaccine projects of different kinds.
Therefore, we do not see ourselves exposed to one or the other in such a pronounced way that it should have a too deep impact on our numbers in both directions, by the way. I would not encourage anybody to have too much fantasy regarding upside. I also believe we should not have too much downside risk here. Talent acquisition, very relevant point. We would not say that we have any initiative, any activity where talent acquisition is a bottleneck that hinders us to execute on any of these activities or initiatives. Definitely, experienced talents in this market, particularly also when it comes to innovative technologies, for example, are rare. That is why we are also, of course, investing into developing our own people when it comes to innovative technologies. Of course, we also have to constantly hire people.
I would say that given our much higher visibility in this market pretty much in all geographies today, for example, in comparison to five years ago, we are doing fine. I would, yeah, always definitely agree it's an important area. You were also asking regarding salary levels. So far, we do not expect any effect of a significance that we should model into our guidances here on top of what we provide you with anyway. Okay?
Clear. Thank you.
The next question comes from the line of Scott Bardo with Berenberg. Please go ahead.
Yeah. Thank you very much for taking my questions and congratulations on remarkable performance. Certainly the best that I've seen looking at the company. A few questions, please. Firstly, notably impressive order book for bioprocess in the fourth quarter, I think 92% growth or so. I wonder, Dr.
Kreuzburg, could you help us understand the composition of that, whether that's leaning more heavily to the instruments or the consumables, that would be helpful. Second question, please. When I look at your guidance for 2021 for bioprocess or Stedim, I note that you're assuming a sequential deceleration in coronavirus demand from 12 percentage points in 2020 to around 8 in 2021, which seems a little bit counterintuitive given how early we are in the vaccine rollout and your commanding order book. I wonder if you could talk to a little bit why we would see a deceleration here. Last question, please, of this set.
I wonder if you could share any thoughts as to whether the delay in European approval of the adenoviral vaccines and/or some of the disruptions or manufacturing expansion bottlenecks that both approved viruses have encountered in Europe has in any way shaped your guidance or been impactful of note to your business. Thank you.
Yeah. Thank you for those questions. On the first one, composition of the order book in BPS following the strong growth in Q4 in particular. As I said before, also Q3 was already quite strong. I would say definitely a healthy mix. Maybe because I think it is a more relevant figure instead of just talking about Q4, because here we also have seen quite a decent portion of instruments and systems in that particular quarter.
Overall, we definitely see a healthy portion of consumables being part of or being represented in our order book. Overall, healthy mix, I would say. Deceleration of corona-related growth. Really, thank you for that question because it helps maybe to avoid any misunderstandings here. We are projecting for BPS 22%-28% top-line growth. Of that, we expect up to 8% by additional corona demand. The baseline for that is what we have achieved in 2020. You could also take the perspective and say, okay, there have been X million EUR of corona-related business in 2020. This we will also have in 2021. On top of that, we have a certain growth in such business. Exactly as you would expect, Scott, we do expect a higher volume in EUR related to corona-related demand. I hope that clarifies that point.
It's not a deceleration in that sense, but maybe it's not an acceleration, but it's definitely a higher volume. Yeah? Yeah? Thank you for helping clarifying that. The problem is our crystal ball regarding delay of approvals and bottlenecks. Our view today would be that for the full year of 2020, when we see all those capacity expansions going on, yes, here and there may be delayed, maybe a bottleneck here and there. Overall, we expect that for the full year, this should not, maybe I should say yet, have any relevant impact. We are talking about a few days, a week here and there. As of today, we wouldn't see a reason to reflect that in our guidance. Of course, we, as everybody else, are learning every day here.
Very good.
If I may just squeeze in one quick other question. Sorry to sort of dissect the bioprocess growth that you've just outlined. If we were to net out the acquisitive effects and the corona demand that you saw in fiscal 2020 for bioprocess, I think you would have had 17% organic growth from your normal business, so to say, according to your numbers. I think your guidance for 2021 on the same logic implies something like 8%-14%, if you like, from your normal business. You mentioned before some delay in approvals. I mean, has this been a realistic factor in shaping slightly more conservative outlook for a normal growth in 2021?
Yeah. I mean, absolutely. You always have this baseline effect. Yeah. I think extrapolating an organic growth of 17% or anything around that would be probably a bit too aggressive.
You have outlined the bandwidth for this underlying organic growth. I think the bandwidth is probably a little bit more related to the corona-related growth portion. Therefore, we said there up to 8%. That does not mean that we have exactly the number for the non-corona-related organic growth. Just to also make sure that you maybe should not focus too much on the lower end of this raw organic growth figure. In other words, I do not think that this difference would be so big and rather reflects normal fluctuations from one year to the other.
Very good. Thanks very much for the answers.
The next question comes to the line of Ed Ridley- Day with Redburn. Please go ahead.
Hi. Good afternoon. Thank you. I would also like to just focus on the outlook. I just want to make sure that I am not missing anything here.
To confirm, firstly, you are involved. I think you previously disclosed more than 80% of the vaccine projects. You are certainly involved with all the major vaccine projects to date. Sort of related to this and related to the prior questions, if we look at the amazing efforts of the pharmaceutical industry to date, we are talking about hundreds of millions of doses have been produced either in the system or awaiting vaccinations. We still have a long way to go. We have governments globally who have ordered well over four billion doses to be delivered by the end of 2021. There is that. You have also mentioned that perhaps your portfolio is also well suited to the adenovirus vaccine manufacturing in particular.
With all these different factors and your really fantastic order book from the second half of last year, I just want to make sure that I've not missed anything else regarding aligning that with your bioprocessing growth guidance for 2021.
Yeah. Thank you for your question. It's, of course, clear where you are heading, whether we are too conservative and sandbagging and so on and so forth. Yeah. I would say, first of all, yes, we are involved in something like 80% of the vaccine projects. We also are suppliers, we believe, to all major projects. Of course, it becomes really a bit more uncertain when we talk about timing. It's even not really very transparent how many doses—I think you mentioned that—are already produced, how many doses to come, what role, yeah, different types also from maybe different countries will play over time.
There will be certain capacity restrictions one way or the other. I believe we are doing very well in comparison to the market environment, let's put it that way. Our competition is doing also, I believe, a great job. You can also read that from their numbers. We maybe overachieve those numbers to some extent. There was a question earlier, "Okay, are there capacity constraints?" As I already said, we feel very comfortable with what we have guided here for 2021. I don't think that we have any significant data points today to say, "Look, 28% is whatever, a walk in the park and too conservative." I don't think that this would be a realistic position. I fully understand your comments and your question. This would be like, yeah, the max scenario maybe in all respects.
Not sure whether we should build our expectation on that.
Fair enough. Thank you for the cutout. Just a very quick follow-up. You've made a series of very useful acquisitions in downstream, some nice tuck-in technology. Just from a couple of comments earlier, am I to understand that there may be further activity, sort of smaller activity in that this year?
Yeah. I mean, it's an amazingly active market, I can tell you. Yeah. There was a very short period of standstill in March, maybe half of April last year. Since then, there are more opportunities than ever before. Of course, as you can imagine, as we have a very clear focus and clear set of criteria, we don't find even a too significant portion of that very interesting. Nevertheless, there are interesting targets out there.
Therefore, it might be that we will make further acquisitions in 2021. It also might be that as in 2018, for example, we will not make any. Both are possible. We feel that our integration processes are well underway in those that we have undertaken. We would feel sufficient management capacities apart from finance and capacities that we definitely have, but also no hurry.
No, thank you for that.
The next question comes to the line of Paul Knight with Key Banc Capital Markets. Please go ahead.
Hi, Joachim. Congratulations on the quarter. The question is regarding this supply situation in the industry. Does this enable you to perhaps gain share in the industry? The second question is, the mRNA potential is significant. How do you view that as an opportunity for Sartorius?
Yeah. Thank you, Paul.
On the first question, of course, I mean, I believe we are again growing a bit stronger than the market and our competitive environment. Therefore, I definitely would say, yeah, we are gaining market share to some extent. I mean, it's always difficult to pinpoint that to one year and say, "Oh, yeah, in 2020, we have gained so much market share and this and that." In general, as over the last couple of years, I believe we are continuously gaining market share. 2020 was not an exception to that. That's definitely the case, I believe. Messenger RNA, that's a good one. Of course, now everybody says, "Hey, what a fantastic technology. What's next there?" Immuno-oncology, of course, is the area that these folks were targeting in the first place. I definitely would say that there is a very significant opportunity.
It looks very, at least, promising in theory. What could be achieved here in very, very helpful therapies in areas where new therapies are urgently needed. However, I think there is really a fundamental difference between developing a new therapy and developing a new vaccine because the mode of action of a vaccine is very clear right from the beginning. You want to trigger your immune system. Therefore, you have to expose your immune system to some fractions one way or the other of this virus. That is different for, for example, treating any kind of cancer where you might not understand really how you could kill cancer cells without killing other cells, for example. It is a much more complex and therefore much more, you could say, also risky and for sure time-consuming undertaking.
Therefore, to now imagine and/or to expect even that from BioNTech, Moderna, CureVac, we will see new drugs every year or so based on that technology, I think, would be by far too optimistic. There is a reason why, even though these companies were working on promising pipelines, they did not have any product in the market yet. I really would take that with a grain of salt. Again, it would be fantastic if such drugs would come through.
Thank you.
Question comes to the line of Falko Friedrichs with Deutsche Bank. Please go ahead.
Thank you. Good afternoon. I have two quick questions left, please. Firstly, on FX. If the rates stay as they are today, could you give us a bit of an idea of the expected headwind this year in 2021 on both your sales and EBITDA? That would be helpful.
Then secondly, a quick follow-up on the chromatography space. Where would you say your competitive market share position is now in this field? Would you say you are already in a number two position now, or is that still a bit of a stretch?
Yeah. Maybe I take the second question first and would then hand over to Rainer, maybe to give you some orientation on FX. I would definitely say that this would be a stretch. We have a very strong major player here that was mentioned before. It's the former GE chromatography business now being part of Danaher under the new branding Cytiva. Here we are talking about more than 50% market share. We definitely would still see MilliporeSigma playing a very significant role in that market. There are a few other players.
I definitely don't think that we are—I wouldn't call ourselves a number two yet. Rainer?
Yeah. Going on FX, of course, we all need a crystal ball to really answer that question. Our assumptions for our line to the guidance are, of course, constant currencies. We've seen, especially in Q4, quite a weakness of the U.S. dollar, which—and always keep in mind that FX has two impacts. One is the realized from the ongoing business, and one is the FX of the valuation of open balance sheet positions. Regarding the ones that are ongoing realized, we are hedged very well, far below the current rates. I hope or would rates remain that high. We would still see—would not be impacted proportionally to that.
To be honest, it's very, very difficult to project right now what it would mean for the different quarters in this regard, knowing that even in 2020, when we look back, the volatility of the—mainly from the U.S. dollar, specifically Q3, which was quite high from $110 -$ 117, and then in Q4 going up to year-end at 2022. Nobody predicted that. Therefore, we are hedged at substantially lower rates that you're seeing right now at year-end, and therefore should be minimizing certain FX effects.
Okay. Thank you.
We have a follow-up question from the line of Scott Bardo with Berenberg. Please go ahead.
Thanks very much, guys, for the quick follow-ups and promised to be quick. Just for expectation-setting purposes, Dr.
Kreuzburg, do you see a situation where, given the high order book growth that you've seen in the fiscal 2020, that we could be in a situation for negative order book growth for bioprocess in 2021? I mean, maybe share some thoughts around that, please. Last real quick question. The midterm targets that you set today, has that taken the light off of your capital markets day later on this year, or what additional things should we expect from that event? Thanks.
Yeah. You were asking for order book growth. That's indeed a number that we, of course, do not project. Clearly, you are talking about the math, what might be the growth of order intake in relation to sales revenue growth. Let me answer in the following way. We have seen a significant expansion from five months - seven months.
I think that's the way probably how we should look on it, rather than a million euros. I believe that a reduction maybe back to maybe not to five months, really difficult to project that as of now, but maybe to six months or something like that is definitely possible. Don't get me wrong. I'm not projecting that you're necessary, but it's definitely possible because from experience, we have really seen that it is in most years really rather around this five months. At seven months, we don't see any reason to expect this to become the new normal. Of course, the big unknown here is the corona vaccine manufacturing initiatives. Never seen anything like that on a global scale. I think we all know that. How this exactly will turn out over time, hard to say.
What I can say, Scott, is once we are completely through this, I would rather expect an order book to represent something around five months of annual sales. Does that mean that in the meantime, the euro value of the order book decreases? Hard to say. That depends exactly on the speed of this effect and how the top line grows. Sorry for not being more precise. On our capital market, I mean, I think I am precise as far as I can. Maybe. I hope that helps. I hope
it helps.
The other one on capital market day, no. We definitely still believe that it hopefully would not be too boring to have a capital market day even with these numbers now out. It did not change our plans in that regard.
Right. Thanks, guys.
Thank you very much.
The next question comes to the line of Virendra Chuahan with Alpha Value. Please go ahead. With Alpha Value. Please go ahead.
Yeah. Good afternoon. Just one from my end. Can you throw some light on the current capacity utilization across your various divisions? Because if I understand rightly, you said LPS, there was some kind of underutilization, especially in 2020, and most of the CapEx that you spoke about is mostly focused on BPS. Just some comments around that would be great. Thank you.
On LPS or also on BPS capacity utilization? LPS you asked for, right?
No. I asked for what's the capacity utilization across each of the divisions.
Oh, okay. Okay. Okay. Okay. Good. LPS, to start off with that, varies very much between the different product segments.
We do have segments where we are operating around 90% or so, and where some capacity expansions are ongoing at the moment. To bolster the growth that we are planning for, because from 90% onwards, it becomes, as we all know, really a stretch to go much beyond that. There are other segments where capacity utilization for the full year has been significantly lower than that after or in the course of, as I said, the shutdown in China and the U.S. If we take maybe the most recent figures, then in such areas, we are operating also around 70%, like in Lewei Ying or so. In that area, we could still extend also our shift system. Therefore, it's always a little bit a question of where do you relate it on.
LPS, in a nutshell, I would say no really significant capacity constraints as of now, as far as we are able to add some capacities in those few areas where we are around 90%. In BPS, we do have some areas where we are also around this 90% mark. Those are areas where we are constantly adding smaller chunks of capacity. For example, in the filtration domain, I mentioned these larger capacity additions in Puerto Rico, for example. Of course, there are also smaller by adding automated manufacturing lines in our clean rooms here, for example, in Germany, and some other measures. The growth that we are projecting, and that to quite some extent would be also growth rates that we expect for, for example, the filtration business, we feel comfortable to being able to achieve them.
Here, definitely, as said before, if you factor all those aspects of planned capacity expansions in, we are in quite a number, at least in this 80% ballpark, where it's really necessary to expand capacities. Hope that helps.
Thank you.
You're welcome. Any further questions?
There are no further questions at this time.
Thank you very much to all of you for participating in this call and for your interest in Sartorius and Sartorius Stedim Biotech. Also, thank you for the good discussion and all your questions. Looking forward to our next touchpoint, latest for our Q1 figures. Of course, we will also update you on our capital markets day once this is finally fixed. All the best to all of you. Take care. Bye-bye.
Ladies and gentlemen, calling now concluded, and you may disconnect your telephone.
Thank you for joining, and have a pleasant day. Goodbye.