Revenues jumped +16.8% to €235.6m, bolstered by the strength of the Bioscience division.
Bioscience keeps bearing the group’s growth in absolute terms, with sales growing +15.0% YoY to €175.3m. Growth was based on volume, and, according to the company, prices have kept a stable trend, as expected. The amount of fractionated plasma reached new maximums, although the increase came at a lower pace than in previous quarters, as GRF is trying to apply a policy of plasma collection control, in order to adapt it to the sales forecasts and therefore to optimize its costs and inventories. Growth rates of this area will progressively accelerate throughout the year with the entrance of new contracts, as the one achieved in Brazil for €41m, which will come into effect in 2Q09.

Solid performance from the rest of the units.
Group revenues were slightly above our estimates, and this was mainly due to the outperformance of the Diagnostic unit. This area grew +27.2% YoY, based on the sales of reagents in Mexico and China; in organic terms, excluding the contribution of the new acquisition (€1.2m), growth would have been +21.3%. The Hospital unit rose +4.1% YoY, while Raw Materials & Others jumped +58.8% YoY, although this performance cannot be extrapolated to the rest of the year, as it is based on the specific needs and leftovers from the production process.

The company achieved growth in all the markets in which it is present.
Sales increased in all the markets, especially in Asia (+79.0%), United States (+27.5%) and Latam (+25.2%); revenues in Europe grew just +2.0%. This is in line with the company strategy of consolidating its presence in the US, the most attractive market in the world, while achieving a geographical diversification and facing the growing demand in plasma derivatives, especially in emerging markets, with the increase in production.

GRF was able to combine this top-line growth with a margin increase.
In spite of the appreciation of the USD, GRF was able to expand its EBITDA margin by more than 100 bps to 30.7%; EBITDA jumped +21.6% vs. 1Q09 to €72.3m. However, due to the balancing effect caused by the lengthy production process, the magnitude of this improvement could swing widely throughout the coming quarters. Net Income rose +33.8% vs. 1Q09 to €41.6m, while net debt came to €500.7m, around 2x EBITDA.

We maintain our Overweight rating.
These results confirm, once more, a clear outlook for the sector and in particular for GRF. The company has not just been able to achieve double digit top-line growth, but also to combine it with a margin improvement. It keeps presenting an attractive combination of growth prospects that are unmatched in current markets with a sector with a high defensive component and therefore, we keep our overweight recommendation for the stock.