3Q Equipment/Consumables
Third quarter revenues for IBO’s Lab Equipment/Consumables Sales Index grew 1.4%, 2.8% excluding currency, to $4,060 million. Operating profits for the Index rose 3.9% to $699 million. Based on continuing operations, operating margin expanded 40 basis points to 18.2% of sales.
Kewaunee Scientific’s fiscal second quarter 2014 sales ending October 31 contracted 16.3% to $26.1 million. Backlog slipped 2.3% to $69.5 million. Stronger international orders more than offset weak domestic orders as a result of budget uncertainties. As expected, domestic sales fell 14.1% to account for 85% of revenues, as sales were primarily driven through the dealer network. International sales slumped 26.6% to make up 15% of sales due to the timing of several large projects in the previous year. Gross margin improved 200 basis points to 18.8% of sales as a result of product mix, and lower manufacturing and overhead expenses. Operating profit declined 6.6% to $1.1 million. US markets are expected to remain challenged in the second half of the fiscal year, and international sales will face a tough comparison in the fiscal third quarter due to large shipments in the previous year.
For the fiscal first quarter 2014 ending October 31, revenue for Pall’s BioPharmaceuticals segment increased 4.7%, 4.5% organically, to $196.6 million to account for 31% of total sales. The acquisition of Medistad contributed 0.8% to revenue growth, while currency lowered sales growth by 0.6%. BioPharmaceuticals revenue, which is now comprised of only consumables, was driven by sales of single-use processing, ForteBio and new products. Sales also benefited from demand in Asian and mature European markets, but were slightly offset by timing of US orders. Pall expects fiscal 2014 BioPharmaceuticals sales to grow near high single digits excluding currency.
Third quarter sales for Sartorius Lab Products & Services (LPS) declined 8.4%, 4.3% excluding currency, to €63.7 million ($84.9 million = €0.75 = $1) to account for 29% of company sales. Orders slipped 0.6% in local currency to €61.0 million ($81.3 million) due to the discontinuation of a few non-core products and slow recovery in the US. Excluding currency, European and North American sales contracted 2.6% and 10.0% to account for 52% and 15% of LPS sales, respectively. Sales to Asia Pacific improved 1.6% excluding currency to make up 28%. Sales to Other Markets fell 2.6% to make up 5% of revenue. LPS adjusted EBITA declined 37.0% to €6.2 million ($8.3 million). The company lowered its 2013 LPS sales growth forecast from 3%-6% growth to flat sales growth excluding currency.
Third quarter sales for Sigma-Aldrich’s Research business grew 1.8%, 3.3% organically, to $341 million to account for 51% of company revenues. Dealer network sales grew in the high single digits organically. Sales to pharmaceutical customers grew in the mid-single digits organically, including the first quarter of growth for the US this year. Despite weak US government and academic demand, combined sales to academic, government and hospital markets grew in the low single digits organically. Research sales were again strongest in the emerging markets and Asia Pacific. Revenues for the Applied business grew 4.1% both on a reported and organic basis to $154 million to make up 23% of revenues. Segment sales were driven by demand from Diagnostic and Testing markets, which grew in the mid-single digits organically. Industrial sales grew in the low to mid-single digits, with improved growth in Asia Pacific. The company’s outlook for the second half of the year was unchanged, as Applied and Research organic sales are expected to grow in the mid-single digits and low to mid-single digits, respectively.
For the fiscal first quarter 2014, revenue for Techne Biotechnology grew 5.3%, 4.4% excluding currency, to $73.2 million to account for 85% of sales. New products contributed 0.3% to revenue growth. US sales to industrial, pharmaceutical and biotechnology customers grew 6.3% to make up 30% of segment revenue. Academic sales fell 4.0% to account for 12%. Total US sales made up 55% of Biotechnology revenues. Excluding currency, segment sales to Europe, Pacific Rim distributors (excluding China) and China grew 1.5%, 13.9% and 38.2% to make up 28%, 9% and 6%, respectively. Segment adjusted gross margin expanded 100 basis points to 79.8% of sales, and adjusted operating profit advanced 1.8% to $42.4 million.
Reported and organic third quarter sales for Thermo Fisher Scientific Laboratory Products and Services (LPS) grew 3.7% to $1,582.1 million to account for 50% of revenues. All businesses recorded higher sales due to demand for clinical trials services and higher consumables sales. LPS adjusted operating income rose 7.1% to $235.3 million. Adjusted operating margin expanded 50 basis points to 14.9% of sales due to improved productivity and higher pricing, but was partially offset by product mix and higher marketing expenses.
VWR third quarter sales grew 2.5% to $1,055.2 million, but declined 0.5% organically. Acquisitions and currency added 1.6% and 1.4% to revenue growth, respectively. Gross profit margin improved 50 basis points to 28.3% of sales due to currency, acquisitions and product mix. Adjusted operating profits climbed 20.8% to $73.8 million. Americas sales slipped 1.2%, 2.0% organically, to account for 57% of total revenues. Segment sales of consumable products declined in the low single digits organically. Sales of capital goods grew in the low single digits organically. Segment sales to all major end-markets were flat or declined in the low single digits. Adjusted Americas operating income grew 10.6% to $29.3 million as a result of lower sales volume. Sales for the Europe segment grew 9.9%, 3.2% organically, to represent 40% of revenues. Sales of consumable products grew in the low single digits, but were partially offset by a low- to mid-single digit decline in capital goods sales. Combined segment sales to pharmaceutical and biotech, industrial and other markets grew in the low single digits. Sales to educational and government customers grew in the low to mid-single digits. Europe operating profit jumped 37.6% to $41.0 million due to lower personnel-related expenses and other cost reductions. Sales for Science Education dropped 14.7% to make up 3% of revenues. Segment operating profit fell 27.1% to $3.5 million.

