Q3: Sartorius says lean manufacturing drives margins

Sartorius says its focus on lean manufacturing and creating additional capacity has pushed its margins up, but increased headcount will have an impact going forward.

For the first nine months of 2021, German life sciences firm Sartorius reported group sales revenue of €2.6 billion ($3 billion), an increase of 50.4% year-on-year.

The firm highlighted strong demand for its bioprocessing services and consumables as a major factor in this growth, with the division contributing almost €2 billon to the top line.

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Within BioProcess Solutions, EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) rose by 76.5% to €724 million ($842 million) representing a jump in margins from 31.9 to 36.5.

Sartorius’ chief financial officer Rainer Lehmann explained the increase in margin to shareholders through the firm’s actions of “focusing a lot on lean manufacturing and really optimizing our processes on really squeezing out our factories and creating additional capacity.”

He continued on the financial call: “But what we also need to keep in mind, and we had it on the last quarter call, the chart of the headcount development and the under proportionate increase.”

However, Lehmann warned investors that margins could be impacted going forward due to the firm’s recent hiring drive. For the first nine months of the year, Sartorius has hired 2,100 individuals, around 40% of these employees were direct labour.

Lehmann said this has “really accreted to the margins,” adding “That means that the rest was for the functional expenses and out of those 2,100 in Q3, we almost hired 900.”

“We’re seeing an increase, specifically in Q3 and towards the end of in our cost base, which of course will have an impact going forward. Our cost base will increase, and we are already seeing the first impact. Since all of that happened towards the end of Q3, it’s not fully reflected yet in the fourth quarter. But let’s please keep that in mind.”