Integrating organizational structures has been the focus of Horiba and Shimadzu, two of the largest analytical instrument companies. Based in Japan, both companies have sought in recent years to improve profitability through consolidating operations, new manufacturing facilities and strengthening their US businesses. As the results for each company’s most recent fiscal years show, these efforts have paid off. Each company posted double-digit growth in operating income in their most recent fiscal years. A weak yen and strong Japanese capital spending also helped increase profitability. The EU’s RoHS initiative and European and Chinese demand helped increase sales for both companies as well.

Shimadzu

Revenue for Shimadzu’s Analytical and Measuring Instruments business (AMI) for the fiscal year ended March 31, 2007 rose 7.9% to ¥149,401 million ($1,277.6 million = ¥116.94 = $1), or 4.4% in US dollars, from ¥138,452 million ($1,223.4 million = ¥113.17 = $1) the year before (see page 12). Operating income increased 19.3% to ¥26,119 million ($223.4 million), or 15.5% in US dollars.

AMI made up 57% of Shimadzu’s revenues and 76% of operating income, excluding “eliminations” and unallocated operating expenses. The company cited domestic demand for photometric analysis instruments and materials-strength testing systems as particularly strong. Internationally, X-ray fluorescence (XRF) sales were also robust. Sales of X-Ray/Surface Analyzers increased 36.0% to ¥15.1 billion ($129.1 million). Also posting double-digit growth were sales of Testing and Non-Destructive Inspection Machines, which increased 16.4% to ¥17.0 billion ($145.4 million), and Environmental Analyzer revenue, which grew 12.2% to ¥8.1 billion ($69.3 million). Analytical Instrument sales increased 6.3% to ¥85.4 billion ($730.3 million), while Other revenue, including contracted analytical services, declined 5.4% to ¥23.7 billion ($202.7 million).

Regionally, the fastest growing market for the AMI business was Europe, where revenue increased 28.1% to ¥15.0 billion ($128.3 million). Sales in Asia-Oceania rose 19.7% to ¥34.0 billion ($290.7 million), highlighted by 27.4% growth in Chinese revenue to ¥17.0 billion ($145.4 million). North and South American sales also increased in double digits, growing 15.7% to ¥13.2 billion ($112.9 million). North American sales alone rose 8.2% to ¥10.2 billion ($87.2 million). During the year, Shimadzu AMI formed a joint venture with GL Sciences, a provider of sample preparation equipment. Shimadzu also opened a 21,700 square meter (233,576 square foot) AMI plant at its headquarters in Kyoto, Japan, which will produce 40 models.

For fiscal 2008, Shimadzu forecasts AMI revenue to increase 4.7% to ¥156.4 billion ($1,337.4 million) and operating income to rise 4.1% to ¥27.2 billion ($232.6 million). For the company as a whole, which also includes the Medical Systems and the Aircraft Equipment & Industrial Machinery divisions, revenues are expected to grow 2.9% to ¥270.0 billion ($2,308.9 million).

Horiba

Sales for Horiba’s Analytical Instruments and Systems business (AIS) rose 7.3% to ¥35,054 million ($301.9 million = ¥116.12 = $1), or 4.6% in US dollars, despite a nine-month fiscal year. Starting with fiscal 2006, Horiba changed its fiscal year-end to December from March. AIS operating income increased 101.8% to ¥2,668 million ($23.0 million), or 96.7% in US dollars. The AIS business made up 30% of company revenues, which also includes three other businesses: Automotive Test Systems, Medical/Diagnostic Instruments & Systems and Semiconductor Instruments & Systems.

Highlights of the AIS unit included strong sales of XRF systems, driven by the EU’s RoHS regulations, molecular spectrometers and elemental analyzers. AIS sales in the Americas increased 43.1% in part due to demand for sulfur analyzers. European revenue increased 18.2%, while Asian sales fell 8.0%. The company also noted good sales of stack gas analyzers in Japan. Stack gas analyzers accounted for 12% of AIS sales. Areas of investment include the environmental analysis in emerging nations and industrial process measurement.

By the end of 2010, the company is aiming for AIS revenues of ¥40,000 million ($344.2 million) and operating income of ¥2,200 million ($18.9 million), assuming current exchange rates. The company’s goal is ¥150.0 billion ($1,291.8 million) in revenues by 2010.