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Earthquakes take a nearly 100% profit cut from Sorin

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Sorin Group

Sorin Group (BIT:SRN) said the May earthquake in northern Italy, which damaged its plant in Mirandola, helped push its bottom line to nearly zero during the 3rd quarter.

The Italian medical device company reported profits of $260,000 (€200,000) on sales of $207.8 million (€160.4 million) for the 3 months ended Sept. 30, for a bottom-line plunge of 98.3% on a sales decline of 6.4%.

"Sorin Group estimates that the negative impact for the quarter from the manufacturing interruption of the Mirandola plant following the earthquakes of May 2012 was, respectively, around €30 million [$38.9 million] in revenue, €13 million [$16.8 million] in net profit and €5 million [$6.5 million] in cash flow. The income statement does not include yet any indemnification from the insurance policy program," according to a press release.

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"Despite a challenging macro-economic environment and a quarter in which we were most significantly impacted by the earthquakes, we continued to perform well with good results in our base business and the full operational recovery of the cardiopulmonary business unit," CEO André-Michel Ballester said in prepared remarks. "We are making good progress implementing our long-term growth strategy, as confirmed by the recent CalMed acquisition and Cardiosolutions investment, both closed during the quarter."

The temblors killed at least 27 people last May. The first, rated at 6.1 on the Richter scale, struck May 20, with a pair of 5.2-magnitude aftershocks following first an hour later and then 11 hours after the first quake. Another 5.8-magnitude temblor hit May 29, causing widespread damage, especially to infrastructure damaged during the first quake, and killed 20 people.

Excluding the impact of the earthquakes (and excluding the revenue impact), Sorin said adjusted net profits were $4.0 million [€3.1 million], down 88.8% compared with the same period last year.

Sorin said it expects 4th-quarter revenues of between €185 million and €190 million ($239.7 million-$246.2 million).

"The company estimates that the product segments impacted by the earthquakes would have generated, under normal conditions, additional revenues of approximately €20 million ($25.9 million)," according to the release.

For the full year, Sorin pegged the negative impact of the quakes at €65 million-€70 million ($84.2 million-$90.7 million), "substantially better than the original outlook."

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