Acquisitions and Efficiencies Push Profits Higher

This issue, IBO has made two changes to its Lab Equipment/Consumables Sales Index. Merck KGaA was removed from the Index, while Thermo Fisher Scientific’s Laboratory Products and Services segment was added.

Fourth quarter sales for the new Lab Equipment/Consumables Index gained 11.9% to $769 million, while operating profits improved 15.5% to $200 million. Operating margin for the same period gained 80 basis points to 26% of sales. For the year, Index sales rose 7.6% to $2,952 million, with operating profits increasing 10.5% to $700 million. Index operating margin for the year climbed 70 basis points to 26.1% of total annual sales.

Biohit AG reported a 4.8% increase in fourth quarter sales to €8.7 million ($11.2 million = €0.78 = $1), while operating income dropped from a profit of €0.3 million ($0.36 million €0.84 = $1) to a loss of €0.1 million ($0.13 million). Year-end sales climbed 9.4% to €31.4 million ($40.3 million = €0.78 = $1), and operating profit recorded a loss of €0.1 million ($0.13 million). Despite an increase in sales, the company fell short of its 2006 guidance. Global sales for diagnostics products and liquid handling sales in Asia did not materialize as expected, and profits were adversely affected by higher costs and financing expenses. For the year, Diagnostics products grew 22% to €1.79 ($2.3 million = €0.78 = $1), but accounted for only 6% of total sales. Operating profits recorded a loss of €2.4 ($3.1 million). Liquid handling sales increased 9% to €29.5 ($37.8 million), accounting for 94% of sales, but operating profits slipped 4% to €2.2 million ($2.8 million). The company expects strong sales for the liquid handling segment and sees a new market opportunity for the diagnostic business in Asia. But, as the company continues to grow, higher expenditures should impact earnings.

Kewaunee Scientific reported fiscal third quarter, ended January 31, sales of $18 million, a 1.8% increase. Operating income improved significantly, from a loss of $0.6 million to a profit of $0.8 million, due to lower manufacturing costs and operating expenses. Strong international markets made up for a small decline in domestic sales. During the quarter, incoming orders jumped to $48.6 million, up from $34.3 million. Given the $14.3 million increase in backlog orders and sustainable operating efficiencies, the company anticipates strong sales and profitability for the fourth quarter.

In the fourth quarter, sales of Millipore’s Bioscience division soared 61% to $158.8 million, accounting for roughly 41% of total sales. Year-end sales grew 30% to $505.6 million, or 40% of total sales. Excluding favorable exchange rates and the Serologicals acquisition, Millipore’s Bioscience division grew 12% and 10% for the quarter and year-end, respectively. The Bioscience division benefited from new products, a growing market for laboratory water and filtration products and international markets. Manufacturing and marketing efficiencies, along with acquisitions, also spurred strong revenue and earnings growth. Excluding sales of Serologicals, year-end sales in the Americas, Europe and Asia/Pacific increased $13.3 million, $14.0 million and $10.6 million, respectively. The firm anticipates organic growth between 8% and 10%. The completed integration of Serologicals, expected in the second quarter, should add revenue and cost synergies.

Fourth quarter and year-end sales for New Brunswick Scientific reached record levels, gaining 9% and 12% to $22 million and $75.5 million, respectively. While operating profits for the fourth quarter slipped to $1.6 million from $2.1 million as a result of higher operating expenses, year-end operating profits climbed 43% to $6 million. Strong demand for the company’s cell culture and fermentation equipment, ultralow freezers and shakers helped push sales to new highs. The company improved inventory control and decreased debt by $4.5 million; accordingly, shareholders’ equity jumped from $36.7 million to $45.1 million. The US accounted for 40% of total company sales, European sales represented 37%, Asian sales contributed 13% and sales to “Other” countries added 11%. The outlook for 2007 is cautiously optimistic. Sales are anticipated to strengthen, but the effects of a new operating system may temporarily disrupt the manufacturing process, affecting sales in the ensuing quarter.

Pall’s BioPharmaceuticals segment reported fiscal second quarter sales, ended January 31, of $92.3 million, an increase of 14.6%, or 8.8% on a currency-neutral basis, representing 17% of total sales for Pall. For the quarter, BioPharmaceuticals had strong consumables sales growth in Europe and Asia, while sector sales were driven by the Western Hemisphere and Europe. The vaccine and biotechnology sector, particularly capsule and single-use processing technologies, contributed to rising consumables revenue. Quarterly sales for Life Science grew 13% to $212 million. Western Hemisphere sales declined 4% to 42% of total Life Science sales, European sales improved 5% to 45%, and Asian sales held ground at 13%. Pall expects sales in BioPharmaceuticals to increase in the mid–single digits in fiscal 2007.

VWR International experienced a 6.7% increase in fourth quarter sales to $829.2 million, and a 17% increase in operating profits to $44.7 million. Year-end revenue grew 4% to $3,257.6 million and adjusted operating income improved 16% to $191 million. Year-end North American Lab sales improved 3.3% to account for 60% of total sales, European Lab sales grew 4.4% to make up 35% and Science Education revenue climbed 5.5% to represent 5%. Organic sales growth for both the North American Lab and European Lab segments improved only 2.5%. Growth in the North American and European markets, led by single-digit growth in the pharmaceutical, biotechnology and industrial markets, was partially offset by declining sales to academic markets.

Whatman’s LabSciences and BioScience segments reported combined year-end revenues of £101 million ($187 million = £0.54 = $1), a 3% increase. Adjusted year-end operating income for the divisions soared 61% to £32.7 million ($60.5 million). Operating profits benefited from the consolidation of manufacturing facilities and acquisition synergies. LabSciences sales grew 3% to £69.4 million ($128.5 million), and BioScience sales climbed 13% to £31.5 million ($58.3 million). In LabSciences, sales for traditional cellulose and glass macrofiltration products increased 1%, while sales of both microbiology analysis filters and chromatography improved 14%. Results for membrane devices suffered from the relocation of manufacturing sites, declining 12%. BioScience sales in the neonatal testing and FTA segments climbed 32% and 60%, respectively, while Multiwell and Biometra sales reported modest gains of 1% and 4%, respectively. In 2006, the company elected to reclassify Biometra from discontinued to continuing operations. According to the company, orders for the beginning of the year have been encouraging. Whatman also sees double-digit growth potential in protein microarray technology.

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