Slower Sequential Growth in 2Q for Lab Instrument Index
Second quarter revenues for IBO’s Laboratory Instrument Sales Index grew 4.8%, 4.3% excluding currency, to $6,259 million. Organic sales growth was driven by strong results from HORIBA, Illumina and Thermo Fisher Scientific. Operating profit advanced 10.5% to $1,324 million. Operating margin expanded 70 basis points to 18.4% of sales. Modest growth estimates are included for Oxford Instruments, which did not report earnings before this issue’s publication.
Affymetrix beat second quarter revenue expectations due to strong genotyping-services revenue. Sales grew 7.5%, 9.5% excluding the divested Anatrace product line (see IBO 10/15/13), to $85.4 million. All figures below are calculated on an organic basis, excluding the divestment. Service and Other revenue surged 80.4% to make up 11% of revenues as a result of several biobanking projects. Consumables sales grew 5.9% to account for 85% of revenues. Instruments revenue fell 21.9% to make up 4%. Overall, Product revenue grew 4.3%. Adjusted gross profit margin advanced 45 basis points to 60.8% of sales. Adjusted operating profit slipped 3.0% to $5.8 million due to increased R&D and additional sales personnel.
Quarterly Affymetrix Genetic Analysis and Clinical Applications sales jumped 45.0% to account for 40% of revenues. Genotyping products and services sales grew 75% to make up roughly 25% of revenues, driven by demand for custom arrays, biobanking samples and agbio applications. Sales to agbio customers accounted for approximately 20% of genotyping revenues. Segment sales were partially offset by lower demand for SNP 6.0 products. Cytogenetic sales grew 14% to make up 16% of revenues, led by demand for CytoScan and OncoScan products. Life Science Reagents sales were flat to account for 8% of sales. Expression sales declined at a higher-than-projected rate, falling 16.3% to make up 20% of revenues, as a result of weak demand for in vitro transcription arrays and lower instrument sales. Total Core revenue grew 11.2% to make up 73% of sales. EBioscience sales grew 5.0% to make up 27% of revenues, led by demand for its flow cytometry single-cell portfolio and new products. On a sequential basis, eBioscience sales declined due to lower sales of QuantiGene products and weakness in Japan. The company raised its 2014 revenue guidance by $5 million to $340 million for growth of 3.0%.
Fiscal third quarter sales for Analytik Jena Analytical Instrumentation (AI) business improved 2.1% to €12.8 million ($17.6 million = €0.73 = $1) to account for 48% of revenues (see page 12). AI gross profit jumped eight percentage points to 57.8% of sales, and adjusted operating profit climbed more than fourfold to €0.9 million ($1.2 million). Life Science (LS) revenue fell 4.2% to €9.9 million ($13.6 million) to account for 37% of sales due to pricing pressure for Biometra thermal cyclers. LS operating margin expanded two percentage points to 43.8% of sales. Adjusted operating loss widened nearly sixfold to €0.6 million ($0.8 million) as a result of lower sales volume.
Harvard Bioscience second quarter sales grew 3.3%, 0.7% excluding currency, to $27.0 million (see page 12). This growth was attributed to higher sales of consumables and molecular-analysis products, which combined accounted for 51% of revenues. Sales expanded in the US and Europe but declined in China. Orders climbed 6.2% to $27.4 million. Adjusted gross profit margin was relatively flat at 46.4% of sales. Adjusted operating profit rose 1.6% to $2.5 million as a result of restructuring.
Second quarter sales for HORIBA’s Process & Environmental Instruments & Systems (P&E) segment climbed 21.8%, roughly 19% excluding currency, to ¥3,939 million ($38.6 million = ¥102.09 = $1) to account for 11% of company revenues (see page 12). Sales were driven by demand for stack gas analyzers and services in Japan and China. Sales in Japan and Asia grew 5.5% and 97.0% to represent 48% and 27% of P&E revenue, respectively. European sales rose 27.9% to make up 13%. Sales to the Americas fell 5.2% to account for 12%. P&E operating income jumped from just above breakeven to ¥425 million ($4.2 million). Sales for the Scientific Instruments & Systems (SI) grew 21.2% to ¥6,025 million ($59.0 million) to account for 17% of company sales. Excluding currency benefits and the acquisition of Photon Technology (see IBO 2/15/14), SI sales grew in the mid- to high single digits. Japanese sales improved 4.6% to make up 21% of SI revenue. Including the acquisition and currency, SI sales to Europe, Asia and the Americas grew 37.7%, 10.3% and 34.2% to account for 28%, 26% and 25% of segment sales, respectively. SI operating profit was ¥301 million ($2.9 million), compared to a loss of ¥239 million ($2.3 million) a year ago. The company raised its full-year P&E segment revenue and operating-income forecast by 3% and 15% to ¥16,000 million ($157 million) and ¥1,300 million ($13 million), respectively. Full-year sales and operating-income forecasts for the SI segment were unchanged at ¥24,500 million ($240 million) and ¥500 million ($10 million), respectively.
Fiscal first quarter 2014 sales for Shimadzu Analytical and Measuring Instrument (AMI) slipped 2.0%, roughly 5% excluding currency, to ¥36.13 billion ($353.9 million = ¥102.09 = $1) to represent 59% of total revenues (see page 12). Japanese sales declined as a result of lower government spending but were partially offset by demand from industrial customers. North American and European sales expanded, driven by sales of LC and MS to health care and pharmaceutical customers in North America and for environmental and food-testing applications in Europe. Chinese sales improved due to strong demand for MS, sales in Southeast Asia slowed and demand in India stabilized. Operating profit rise 50.7% to ¥2.87 billion ($28.1 million).
For the first half of the year, sales for Spectris Materials Analysis (MA) fell 9.5%, 5.5% organically, to £150.7 million ($251.2 million = £0.60 = $1) to account for 28% of sales. Acquisitions contributed 2% to revenue growth, while currency lowered sales growth by 6%. Demand from metals, minerals and mining sectors was weaker than expected due to lower capital spending, slowing in China and a decline in demand for commodities. Despite strong growth in China, academic-research sales contracted as government spending declined in Europe and North America. Sales to pharmaceutical and semiconductor markets each increased. Pharmaceutical sales were strong in North American and Asia, led by biopharmaceutical and generic-drug customers and acquisitions. Aftermarket service revenue as a percentage of sales expanded 200 basis points to 32%. Adjusted MA operating profit slumped 35.9% to £13.2 million ($22.0 million).