Eurofins reports solid progress on its second laboratories start-up program with 21 openings in 18 months

Eurofins Scientific (EUFI.PA), the global leader in bio-analytical testing, announces that following the finalization in 2013 of its first laboratories start-up program (2010-2013), and in view of the current and expected market growth, the Group has started a new program of start-up openings to further enlarge its footprint in its fastest-growing markets.  The first program was completed in 2013, when the Group's 17 start-up laboratories across 12 countries became profitable as a whole.  In light of this, and Eurofins' enlarged scale and ability to invest in temporarily dilutive programs while still improving profits, the Group has launched its second start-up program at the beginning of 2014 to support the next growth cycle, and is pleased to report its very successful progress at about halfway after 18 months.  

Between January 2014 and the end of June 2015, the Group has opened 21 start-up labs, and until mid-2017, a total of 35 (i.e. 14 more) are planned in Australia, China, France, Germany, India, New Zealand and the USA. Despite the inclusion of the start-up costs associated with the 21 new laboratories that had already been opened in the last 18 months, the Group's separately disclosed items (SDI), which contains these temporary network expansion costs, have been reduced in absolute value to EUR 10.1m in H1 2015, versus EUR 18.0m in H1 2014 and EUR 14.8m in H1 2013, as well as relative to the EBITDA of the Group's mature businesses, to 7.1% in H1 2015, compared to 16.5% in H1 2014 and 15.9% in H1 2013. In fact, despite the costs of opening up 21 start-up laboratories between 2014 and 30 June 2015, Group EBITDA still grew 45% and operating cash flows expanded 93% in the first half of 2015, demonstrating that Eurofins can now open many start-ups without slowing down its profit growth.

In the US, where Eurofins generated 34% of Group revenues in the first half of 2015, and where regulatory catch-up, as well as the development of new market segments such as nutraceuticals, are expected to continue to drive strong growth momentum, Eurofins is accelerating its network expansion program, launched in 2014, to reinforce its footprint in the rapidly-growing domestic food testing market. The Group has recently completed two food microbiology testing laboratories in Lancaster, PA, and in Mounds View, MN, and is constructing 10 small and medium-sized microbiology testing laboratories across the country for samples where rapid initiation of analyses is critical.  These new laboratories complement its 11 existing food testing sites, which include its Competence Centers for contaminants testing in Louisiana (which was moved to a brand new, twice-as-large laboratory in 2014); for nutritional testing in Des Moines, IA; for dairy testing in Minnesota; for nutraceuticals testing in California; and seeds and plants testing in Colorado and Wyoming. Furthermore, these start-up laboratories should provide additional platform on which the Group can further deploy its innovative food testing methodologies based on advanced genomics technology. The Group has also expanded and modernized its existing competence centers in Des Moines (IA), Petaluma (CA) and New Orleans (LA) in view of the strong growth in their respective specialities. Upon completion of the US network expansion program, expected in mid-2017, Eurofins' food testing laboratory network will have a total of 23 laboratories across the US, covering over 60% of its addressable local market, plus multiple grain testing sites.

In Asia Pacific, where Eurofins generated about 7% of its revenues in the first half of 2015, the Group is continuing its network expansion program to develop its footprint to become the leading food and environment testing service provider in the region. The Group recently completed its network upgrade and expansion program for 7,300m² of laboratory surface in Australia and New Zealand as communicated in December 2014[1]. In Hong Kong, the Group's newly-opened lab, which will perform time-sensitive bacteriology tests, is expected to increase the Group's penetration of the local food testing market, which was previously limited to more advanced chemistry tests sent to the Group's sites in mainland China and Europe. Eurofins is also expanding its main Chinese food testing laboratory in Suzhou, to support the growth in testing. In India, Eurofins recently opened a food testing laboratory in New Delhi, its second laboratory in the country, after the newly-expanded laboratory in Bangalore. These 2 sites allow Eurofins to cover some of the most important and affluent regions in the country, with high concentrations of both international, as well as premium local food companies. In addition, Eurofins has also opened a new laboratory in Coimbatore, in Southern India, housing the Group's agrosciences expertise to support the country's vast agricultural services sector. The Group remains committed to strengthening its footprint in the Asia Pacific region both through selective acquisitions and greenfield expansion.

In France, where the recent completion of the IPL restructuring has removed performance overhang in the Group's French environment testing business, Eurofins is launching 6 start-up labs to optimize its footprint in water testing and reinforce its leading position in the broader environment testing market in the country. Following the re-organization of the water testing business during the IPL restructuring, Eurofins is now setting-up 6 satellite laboratories, taking its nationwide coverage across 13 satellite labs, complementing the large, regional central lab for water testing in Maxeville. Furthermore, the Group has also opened 3 laboratories in Nantes, Bordeaux, and Vergèze to reinforce its market leadership in ambient air and building materials testing. The new laboratories are expected to be operational by the end of 2015.

Beyond these, Eurofins plans further laboratory openings in Asia, Australia and Germany.

Comment from Dr. Gilles Martin, Eurofins CEO: "Eurofins' network investments reflect our commitment to maintain the most advanced, state of the art laboratory network in the world, and our confidence in the Group's outlook in the medium term. We believe that these investments should contribute additional growth and support the next growth cycle for Eurofins. Moreover, due to the scale of our well-invested existing network, Eurofins can continue investing intensively in highly dilutive start-ups and other network expansion programs, and still be able to deliver substantial profit improvements, as demonstrated in the 45% EBITDA growth and 93% increase in operating cash flows in the Group's H1 2015 results."

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Notes for the editor:

Eurofins - a global leader in bio-analysis

Eurofins Scientific is the world leader in food, environment and pharmaceutical products testing. It is also one of the global market leaders in agroscience, genomics, discovery pharmacology and central laboratory services. In addition, Eurofins is one of the key emerging players in specialty clinical diagnostic testing in Europe and the USA.

With 20,000 staff in around 200 laboratories across 38 countries, Eurofins offers a portfolio of over 130,000 reliable analytical methods for evaluating the safety, identity, composition, authenticity, origin and purity of biological substances and products, as well as for innovative clinical diagnostic. The Group provides its customers with high-quality services, accurate results on time and expert advice by its highly qualified staff.

Eurofins is committed to pursuing its dynamic growth strategy by expanding both its technology portfolio and its geographic reach. Through R&D and acquisitions, the Group draws on the latest developments in the field of biotechnology and analytical chemistry to offer its clients unique analytical solutions and the most comprehensive range of testing methods.

As one of the most innovative and quality oriented international players in its industry, Eurofins is ideally positioned to support its clients' increasingly stringent quality and safety standards and the expanding demands of regulatory authorities around the world.

The shares of Eurofins Scientific are listed on the Euronext Paris Stock Exchange (ISIN FR0000038259, Reuters EUFI.PA, Bloomberg ERF FP).