Second Quarter Financial Results

Africa Slows BD Biosciences Growth

Fiscal third quarter revenue for Becton, Dickinson’s BD Biosciences unit improved 0.4%, 1.2% excluding currency, to $270 million to make up 8% of company revenues. Sales growth was offset by 2% due to challenges in the clinical HIV business in Africa, which accounted for roughly 3% of Biosciences revenue. Funding delays in Western Europe and Japan further hindered sales growth. Conversely, US sales grew in double digits, led by higher demand for research systems, especially the new FACSymphony and FACSCelesta cell analyzers. As a result, sales for the complementary Sirigen dyes also expanded. Demand for research reagents expanded globally, including a strong uptake for OptiBuild custom reagents. Given the underperformance in the African HIV business, the company lowered its fiscal 2016 sales expectations for the Biosciences unit.


Bio-Rad LS Maintains Steady Growth

Second quarter sales for Bio-Rad Laboratories’ Life Science (LS) segment grew 5.5%, 6.0% excluding currency, to account for 35% of revenue. Segment sales remained strong for Droplet Digital PCR systems and reagents. Double-digit sales growth was reported for process chromatography media products. Sales growth was also higher for cell biology products. Geographically, LS sales were driven by demand in the US, China and Eastern Europe. LS gross margin improved 120 basis points due to product mix, as well as improved margins in process media and gene expression products. Reported operating loss narrowed 12.1% to $5.1 million.


Protein Analysis Drives Bio-Techne Sales

For the fiscal fourth quarter ending June 30, revenue for Bio-Techne’s Biotechnology segment advanced 8% organically. However, sales were favorably impacted by roughly 2% due to timing of the Easter holiday in Europe. Excluding the extra selling day, revenues were driven by an enhanced online presence and demand for new products.

Segment sales in the US grew in the high single digits, including roughly 9% sales growth for biopharmaceutical customers and mid-single digit sales growth for academic markets. Organic sales in Europe advanced 10%, 5% excluding extra days, with comparable growth across end-markets. Given the vaccine safety issues in China earlier this year, sales growth for this region, despite growth in the mid-teens, was slower than the previous several quarters. Japanese sales remained challenged. However, sales in the rest of APAC climbed roughly 20% organically. Biotechnology adjusted operating margin contracted 100 basis points to 52.4% due to increased investments.


Fiscal full-year Biotechnology sales grew 6% organically, including roughly 1.3% sales growth from new reagent products introduced over the last year. US sales grew in the high single digits, led by strong demand from biopharmaceutical markets and augmented web-based sales. Accounting for roughly 30% and 4% of segment revenue, respectively, European and Asian sales were healthy.

Organic fiscal fourth quarter sales for Bio-Techne’s Protein Platforms segment jumped 29.0%, including strong double-digit revenue growth for each of the Simple Western, SimplePlex and Biologics product lines. Continued uptake of the new iCE system, Maurice, also contributed to segment growth. Adjusted operating profit for the segment expanded 80 basis points to 31.4%. Fiscal 2016 Protein Platforms sales grew 14% organically. For fiscal 2017, organic segment sales are expected to grow at a similar rate.


Shimadzu Hampered by Yen Appreciation

Shimadzu fiscal 2017 first quarter sales for the Analytical and Measuring Instrument (AMI) division ending June 30 declined 1.7% to ¥42.5 billion ($393.4 million = ¥107.93 = $1) to represent 61% of total revenues. However, excluding currency, AMI sales grew roughly 5%, led by strength in Japan and China. Japanese sales grew above the company average, led by demand for LC, MS and surface analyzers from pharmaceutical, steel and food markets. Currency-neutral sales in China grew in double digits, driven by higher LC and MS sales to government and academic as well as pharmaceutical and contract analysis markets. Other Asian regions recorded mixed results, as sales in India benefited from continued pharmaceutical demand, but government sales slowed in Southeast Asia. Currency-neutral sales in the Americas declined slightly due to lower demand from US pain care management companies and weakness in South America. AMI operating margin expanded 78 basis points to 11.6%.


VWR Exhibits Steady Growth

VWR’s second quarter sales advanced 6.3%, 4.4% organically, to $1.15 billion. Currency lowered sales growth by 0.3%, while acquisitions contributed 2.2%. Overall, biopharmaceutical demand, especially for chemical products, including private label offerings, drove organic growth. Government sales were also healthy, with particular strength in the US.

Organic sales for VWR’s Americas segment grew 3.9% following record growth in the first quarter. Demand from biopharmaceutical markets remained strong, as sales grew in the high single digits, including demand across all customer segments. Government sales advanced in the high single digits. Education and health care sales each grew in the low single digits. Industrial sales declined in the low single digits, as strength in wastewater treatment, and paper and pulp markets was offset by weakness from food and beverage, and environmental customers. By product, chemical and consumables sales grew more than 10% and roughly 2%, respectively. Equipment and instrumentation sales grew in the low single digits. Americas adjusted operating margin was relatively flat at 6.3%.


VWR’s EMEA-APAC sales grew 5.1% organically, but benefited from two additional selling days because of the timing of Easter. Biopharmaceutical, health care and industrial sales each grew in the high single digits. Strong demand from large pharmaceutical and biotech customers boosted sales for the biopharmaceutical market, while higher sales to reference labs enhanced health care revenue. Industrial sales experienced strength in food and beverage, petrochemical and microelectronic markets. Conversely, education sales were flat, and sales to government customers declined in the low single digits. By product, segment sales of consumables and chemicals grew roughly 8% and 5%, respectively. Equipment and instrument sales were relatively flat. EMEA-APAC adjusted operating margin expanded 54 basis points to 9.0% due to increased sales volume and a shift in currency translation.

VWR gross profit margin expanded 50 basis points to 28.1% due to product mix, and stronger demand for private label products and services. Adjusted operating margin improved 20 basis points to 7.4%. The company maintained its 2016 revenue outlook of $4.54–$4.63 billion but now expects it to be closer to the lower end of the range as a result of increased currency volatility. VWR also reaffirmed its intermediate and longer-term organic sales growth expectations of 3%–4%.


Spectris Struggles to Grow

For the first half year ending June 30, Spectris Materials Analysis (MA) sales grew 6.0% to £175.6 million ($250.9 million = £0.70 = $1) to account for 30% of sales. However, excluding currency and acquisition contributions of 4% and 2%, respectively, organic sales were flat. Growth was hindered by a strong pharmaceutical sales comparison as well as weak demand from commodity markets. Aftermarket sales accounted for just under 20% of MA revenue.

Sales in the metals, minerals and mining sectors contracted sharply in all major geographic regions, as capital equipment spending for large systems was either delayed or cancelled. With the exception of aftermarket sales, demand from cement and building materials markets waned, especially in North America and Europe. Conversely, academic sales improved due to strength in China and India, for which the comparison was weak. Academic sales in both North America and Germany were also slightly higher, but were partially offset by weakness in the UK.

Given the notable demand for QC applications in India a year ago, organic pharmaceutical sales grew modestly, with growth in Japan, US and Europe. Life science sales expanded due to the acquisition of Clean Air Service (see IBO 4/15/16).

Sales in the electronics, semiconductor and telecom sectors advanced due to new products, and acquisitions of distributors in South Korea and Taiwan.  

By geography, organic MA sales grew in North America and Asia, led by China and Japan, but declined in Europe. Sales in the Rest of the World also contracted due to challenges in Brazil.

Adjusted MA operating margin climbed 310 basis points to 11.9% as a result of completed cost reduction measures. The company projected similar end-market demand for the second half of the year, but with slightly higher pharmaceutical sales and uncertain demand in academic markets.

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