Net sales amounted to SEK 381 (283) million in Q2’19, corresponding to growth of 29% in local currency. The outcome was significantly better than our forecast, estimating sales of SEK 349 million (analyst consensus was 347 million). Adjusted for the growth acquired from the Genomics business unit, growth amounted to 18% in local currency.
The better-than-expected result can mainly be attributed to the time-lapse business unit. Sales in the business unit grew by an impressive 56% in local currency and amounted to SEK 106 (65) million. We were expecting that the impressive start in China would be somewhat countered by decreasing growth in Europe and forecasted a growth of 15% in the business unit. While we recognise that the single largest order so far was delivered during Q2 and that growth can vary from quarter to quarter, we will raise our expectaions for growth in the business unit going forward.
Sales in the media business unit was in line with our forecast and amounted to SEK 172 million. The result corresponded to growth of 4% in local currency (we forecasted growth of 5% in local currency and sales of SEK 174 million). The company reports that the growth was negatively impacted by delivery problems for a few unique media products for China, but that the problems will be rectified during the third quarter.
In the disposable devices business unit, sales increased by 11% in local currency and amounted to SEK 47 (40 million). The result was slightly better than expected (our forecast assumed growth of 8% in local currency and sales of SEK 44 million).
The contribution from the genomics business unit was close in line with our estimate and amounted to SEK 33 million (we forecasted SEK 35 million). As expected, the highest growth came from the market region Americas (where total sales increased by 65% during the quarter).
Sales of ART equipment returned to growth and was slightly higher than expected.Growth during the quarter was 24% in local currency and amounted to SEK 15 (11) milion (we were expecting an increase of 4% in local currency and sales of SEK 11 million). We will raise our expectations for growth in the business unit going forward.
The gross margin was in line with our forecast and came in at 64% (compared to 66% in Q2’18). While Vitrolife enjoyed a currency tailwind during the quarter (less than 1% positive impact on the group gross margin according to management), the gross margin was negatively impacted by the growing contribution from the genomics business unit.
As a result of the higher-than expected contribution from the time-lapse business unit, earnings beat our forecast by a wide margin. The EBITDA and EBIT in Q2’19 was SEK 146 million and SEK 123 million, respectively (we forecasted and EBIT of SEK 117 million). The EBITDA margin was 38% (41%) and EPS growth about 19%. Selling expenses were significantly higher than expected, however, and 19 new employees had been added to the the group by the end of the quarter (compared to the Q1’19).
Overall, the report was better than expected. With the seemingly strong demand for time-lapse technology in China and launch of new products within the media and time-lapse business units, we see that significant growth opportunities remain.
We will return with a comment when with updated estimates.
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