Agilent Ends Its Fiscal Year

As IBO reported in its November 30 issue, Agilent Technologies’ Bio-Analytical Measurement business (BAM) revenues grew 14% in fiscal 2008 ended October 31 to $2,295 million. From the recent filing of SEC documents for the fiscal year, additional information is now available about the business’s fiscal year.

Excluding acquisitions, which contributed 2% growth, and the impact of foreign currency, which contributed 5% growth, BAM revenues increased 7% in fiscal 2008. Product sales grew 14% to represent 80% of BAM’s net revenues. Service and other revenue represented 20% of sales and increased 16%. Orders for the fiscal year increased 17% to $2,365 million.

Chemical analysis sales rose 9% to $1,272 million, driven by sales to the petrochemical and food safety markets. However, environmental testing sales were described as “relatively modest” and sales of semiconductor-related capital equipment decreased, referring primarily to the sale of laser interferometers. In the current fiscal year, Agilent will report sales of laser interferometer as part of a new Semiconductor and Board Test unit. BAM’s Life Science revenue rose 23% in fiscal 2008 to $1,023 million, including 11% growth from acquisitions. The business reported a slowdown in sales to the pharmaceutical and biotech industries, but strong growth in the academic and government markets.

Gross margins for BAM were flat in fiscal 2008 at 53.5%. According to Agilent, foreign currency and “competitive pressures” offset gross margin improvements generated by product mix and lower overhead costs. Operating margin increased one percentage point to 17.4%. Income from operations for BAM increased 22% to $400 million, compared to 40% growth in fiscal 2007. R&D increased 21% to $208 million, including a 12% increase due to the acquisitions of Stratagene (see IBO 4/15/07) and Velocity11 (see IBO 11/15/07), compared to a 5% increase in fiscal 2007. SG&A expenses rose 8% to $621 million, including 8% growth due to Stratagene and Velocity11.

BAM’s performance has outshined that of Agilent’s Electronic Measurement unit. Severely affected by the global economic crisis, the Electronic Measurement business is the primary target of a restructuring program announced by Agilent on December 12. Actions include a temporary pay cut for all Agilent employees and the termination of more than 300 temporary positions and 500 regular positions. Total annual savings are estimated to be $165 million.

Chart: Agilent BAM Revenues

FY06 FY07 FY08

Products 1328 1615 1842

Services and Other 343 390 453

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