Biotechnology Company Avantor Aligns Business Segments, Eyes Cost Savings

At the investor day, Avantor Inc AVTR announced its plans to transform the business by implementing a new operating model and launching a multi-year cost optimization initiative. 

Segment Change: As per the new model, Avantor plans to transition to two complementary business segments from three geographic segments - Laboratory Solutions and Bioscience Production.

Michael Stubblefield, President and Chief Executive Officer, said, "Aligning our model with our research and production capabilities is a natural evolution of our business that will strengthen our performance, sharpen our focus on accelerating customers' innovation, and unlock significant operating efficiencies."

As part of the realignment, Sheri Lewis, Executive Vice President, Global Supply Chain, and Frederic Vanderhaegen, Executive Vice President of Europe, will leave Avantor in 2024. 

Cost Optimization Initiative: The company plans to boost its productivity through increased organizational efficiency, footprint optimization, reduced cost-to-serve, and procurement savings.

These initiatives are projected to generate around $300 million in run-rate cost savings by the end of 2026.

FY23 Guidance: Avantor reiterated the core organic revenue decline of 6.0%-5.0% (down 8.5%-7.5% organic), adjusted EBITDA margin contraction of 240-215 bps (18.5%–18.8% margin), and adjusted EPS of $1.02-$1.06 vs. consensus of $1.04.

Also Read: Avantor Amid Industry Challenges, Analyst Predicts Declining Core Organic Revenue

Price Action: AVTR shares closed higher by 0.19% at $20.89 on Thursday.

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