Endpoint: Life Science Index

The Life Science Sales Index article in the March 15 issue of IBO excluded a summary of Tecan results. For the second half of 2014, Tecan sales grew 10.2%, 5.8% organically, to CHF 227.5 million ($242.0 million = CHF 0.94 = $1). The acquisition of IBL (see IBO 7/31/14) contributed 4.5% to sales growth. Currency reduced sales growth by 0.1%. Orders expanded 12.2%, 7.5% organically, to CHF 220.8 million ($234.9 million). Recurring revenues, including services, consumables and reagents, grew 9.8% excluding currency to account for 36% of total sales. Total operating profit grew 9.5% to CHF 34.7 million ($36.9 million). Life Sciences (LS) sales grew 7.3%, 0.4% organically, to make up 60% of revenues. The acquisition added 7.3% to LS revenue growth, while currency lowered sales by 0.4%. Sales for the Partnering Business (PB) grew 14.7%, 14.2% excluding currency, to account for 40% of revenues.

Full-year 2014 Tecan sales improved 2.9%, 1.8% organically, to CHF 399.5 million ($434.3 million = CHF 0.92 = $1). The acquisition added 2.4%, while currency cut sales growth by 1.3%. Orders expanded 8.1%, 7.1% organically, to CHF 417.4 ($453.7 million). Following the acquisition, total sales to diagnostics customers accounted for roughly 60% of revenues. All sales figures below are expressed in local currency. Benefiting from the acquisition, European sales grew 6.5% to account for 44% of revenues. Sales in Asia jumped 19.2% to make up 15% of revenues as a result of strong OEM sales. Chinese sales, which made up 7% of revenues, grew at a slightly lower pace than other Asian regions due to delayed government orders and slower academic spending. North American sales declined 3.0% to represent 38% due to lower OEM demand. Sales to Others grew 6.0% to make up 3%. Despite unfavorable product mix and pricing, gross profit margin expanded 70 basis points to 49.5% of sales as a result of lower material costs. Adjusted operating profit grew 4.0% to CHF 57.0 million ($62.0 million), as improved gross margin and lower R&D expenses offset increased sales and marketing investments in China and higher overall administrative expenditures. For 2015, currency-neutral sales are projected to grow double digits, including the acquisition.

Tecan’s 2014 LS sales grew 5.6%, 3.3% organically, to make up 59% of sales. The acquisition added 4.2% to sales growth, partially offset by currency headwinds of 1.9%. LS growth was driven by demand for liquid handling systems in North American and Europe, as well as higher revenues of services and consumables, which accounted for 23% and 15% of LS sales, respectively. Instruments and reagents made up 58% and 4% of LS sales, respectively. LS operating profit jumped 118.5% to CHF 40.2 million ($43.7 million) due to gross margin expansion and lower R&D expenses. PB full-year revenue slipped 0.8%, 0.2% excluding currency, to make up 41% of sales. Sales were negatively impacted by lower orders from a large customer, and weak components sales accounted for 23% of segment revenue. Instruments sales made up 41% of segment sales. Revenues from services, spare parts, consumables and development funding accounted for 36%. PB operating profit fell 41.7% to CHF 24.9 million ($27.1 million) due to product mix, higher sales and marketing expenses, and a strong year-over-year comparison.

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