2Q Organic Lab Equipment/Consumables Index Sales Expand

For the second quarter, revenues for IBO’s Laboratory Equipment/Consumables Sales Index grew 1.2%, 2.2% excluding currency, to $4,111 million. Operating profits for the Index rose 0.2% to $738 million. Based on continuing operations, operating margin slipped 30 basis points to 17.9% of sales.

For the fiscal second quarter ending May 31, revenue for Gerresheimer’s Life Science Research segment fell 15.9%, 12.4% organically, to €22.4 million ($29.0 million = €0.77 = $1) to account for 7% of company sales. The divestment of a Chinese subsidiary (see IBO 10/31/12) reduced sales growth by 3.8%, while currency added 0.3% to sales growth. The decline in revenues was due to lower research spending in the US and a reduction of inventories by customers. Despite depressed sales, adjusted EBITA was flat at €2.6 million ($3.4 million) as a result of higher margins.

Kewaunee Scientific’s fiscal first quarter sales ending July 31, climbed 19.9% to $32.0 million. However, back orders fell 11.3% to $70.1 million, primarily due to the completion of a large international project. International sales grew 21.6% to make up 15% of revenues, led by demand in India, the Middle East and Singapore. Domestic sales, which improved 19.6% to account for 85% of revenues, also benefited from a strong backlog, as well as good demand for mid-size private laboratory projects. This growth was partially offset by fewer large and public projects, coupled with competitive pricing. Gross margin expanded 90 basis points to 20.5% of sales due to increased manufacturing volume. Operating profit jumped 120.1% to $2.4 million and profit margin climbed 350 basis points to 7.6% of sales as a result of lower operating expenses.

For the fiscal fourth quarter ending July 31, revenue for Pall’s BioPharmaceuticals segment grew 5.1%, 5.6% excluding currency, to $15.2 million. Consumables sales grew 6%. Fiscal full-year BioPharmaceuticals revenue grew 7.6%, 7.5% organically, to $812.3 million to account for 31% of company sales. The acquisition of ForteBio (see IBO 12/31/11) added 2.1% to revenue growth, while currency lowered sales growth by 2.0%. Sales were driven by demand for single-use processing technologies for drug production. Consumables sales grew 10%. Back orders jumped 22.1% to $191.3 million.

In the second quarter, sales for Sartorius’s Lab Products & Services (LPS) segment improved 0.4%, 2.4% excluding currency, to €66.7 million ($86.6 million = €0.77= $1) to account for 31% of company sales. Orders were just below the previous year in local currency at €63.6 million ($82.64 million), due to the discontinuation of a few non-core products. Excluding currency, European and Asia/Pacific sales grew 5.9% and 3.2% to account for 53% and 28% of LPS sales, respectively. Sales to North America and Other Markets fell 7.4% and 4.6% to make up 15% and 4% of revenues, respectively. LPS adjusted EBITA declined 5.6% to €7.3 million ($9.5 million). Excluding currency, 2013 LPS sales are projected to grow at the low range of the previous guidance of 3%–6%.

Second quarter sales for Sigma-Aldrich’s Research business grew 1.4%, 2.9% organically, to account for 52% of company revenues. All business units within the Research segment grew organically, driven by mid-single digit sales growth for the dealer networks and low to mid-single digit growth for pharmaceutical customers. Combined sales to academic, government and hospital markets grew in the low single digits organically. Research sales were strongest in the emerging markets and Asia Pacific regions. The Applied business grew 6.0% on a reported and organic basis to make up 23% of revenues, led by demand for diagnostic kits and raw materials for testing for clinical customers. Combined sales to diagnostic and testing customers grew in the high single digits organically. Industrial sales grew in the low to mid-single digits organically. For the second half of the year, Applied and Research organic sales are expected to grow in the mid-single digits and low to mid-single digits, respectively.

For the fiscal fourth quarter ending June 30, revenue for Techne’s Biotechnology segment improved 1.0%, 1.1% excluding currency, to $73.7 million to make up 93% of company sales. All figures below are organic. Sales to US industrial, pharmaceutical and biotechnology customers grew 2.6%, but US academic sales slumped 6.8%. Sales to Europe and China climbed 6.8% and 17.7%, respectively. Sales to Pacific Rim distributors slipped 0.1%. The Biotechnology segment’s adjusted operating income declined 3.3% to $40.0 million.

For the fiscal year, Techne’s Biotechnology sales declined 1.7%, 0.8% organically, to $288.2 million to account for 93% of revenues. All figures below are organic. US sales to academic and combined industrial, pharmaceutical and biotechnology customers declined 5.9% and 2.6% to account for 13% and 29% of segment revenues, respectively. Total sales to the US accounted for 55% of segment revenues, European sales improved 0.1% to make up 28%, and sales to China and Pacific Rim distributors grew 18.9% and 3.5% to account for 5% and 9%, respectively. Sales to other regions made up 3%. Biotechnology adjusted operating income fell 6.5% to $158.1 million due to currency, lower sales volume and higher R&D expenses.

Second quarter sales for Thermo Fisher Scientific’s Laboratory Products and Services (LPS) grew 3.1%, 2.5% organically, to $1,583.2 million to account for 49% of company revenues. Acquisitions contributed 0.7% to revenue growth, while currency lowered sales growth by 0.1%. Organic sales were primarily driven by strong demand for clinical trial logistics services and higher sales of laboratory consumables. However, lower demand from academic and government customers reduced segment sales growth by 1%–2%. LPS adjusted operating income expanded 3.2% to $229.0 million. In spite of higher cost of goods, increased investments and unfavorable sales mix, adjusted operating margin improved 10 basis points to 14.5% of sales due to pricing and productivity improvements.

VWR second quarter sales grew 2.6% to $1,049.0 million, but declined 0.7% organically. Acquisitions and currency added 2.8% and 0.5% to revenue growth, respectively. Gross profit margin fell 30 basis points to 28.2% of sales due to product mix and pricing. Adjusted operating profits slipped 0.2% to $63.6 million.

Sales for VWR’s Americas segment grew 0.4% to account for 57% of total revenues. However, segment sales declined 1.1% organically, including flat to low single digit declines across all end-markets. Reported sales of consumable products, including chemicals, fell in the low single digits. Sales of capital goods grew in the low single digits. Americas operating income fell 24.0% to $26.9 million as a result of lower sales volume. Sales for the Europe segment climbed 7.6%, 1.5% organically, to represent 41% of revenues. Sales of consumable products grew in the low single digits, while sales of capital goods fell in the mid-to high single digits. By end-markets, segment sales to pharmaceutical, industrial and other customers were each flat. Sales to educational and governmental customers each grew by low to mid-single digits. Europe operating profit jumped 28.1% to $37.4 million due to lower personnel-related expenses. Sales for the Science Education segment dropped 23.0% to make up 2% of revenues due to lower demand in the US and a divested retail product line. Segment operating loss widened by 22.2% to $0.7 million.

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