Waters Updates Business Conditions
In an investor presentation, Waters explained that a decline in sales in India, Korea and Brazil in the fourth quarter was due to the countries’ rapidly strengthening currency, which caused adjustments to end-users’ budgets. Waters expects this to be a short-term dynamic. Waters also noted that its consumables revenue was more impacted than service revenue and that slowing industrial sales impacted its TA Instruments business in particular.
Milford, MA 1/12/09—Waters has announced preliminary sales for the fourth quarter of 2008 of approximately $418 million. This figure is within the range of the company’s revised guidance announced last month of $410-$420 million (see IBO 12/15/08). Waters specifically attributed the reduced sales volume to unfavorable currency translations, slower spending by chemical manufacturers, continued weak demand from the pharmaceutical industry, as well as reduced sales in some developed countries. Offsetting the decline was stable sales growth for recurring revenue product lines and strong growth in China. Waters anticipates a continuation of these conditions in the first half of the year, including adverse currency effects. The company expects new instruments and growth in recurring revenue lines to benefit sales. Expense management and optimized manufacturing is expected to benefit operating profits. In addition, Waters expects continued significant free cash flow to fund acquisitions and stock buybacks.
