Despite improvements in the US and China and in pharmaceutical and academic markets, currency effects curtailed sales and profit growth for major publicly held instrument and laboratory-product businesses in the fourth quarter of 2014. For the year, the businesses maintained revenue growth, helped by pharmaceutical sales and improved academic markets.

Combined sales for the six businesses whose financial results are profiled on pages 9–11 grew 2.7% for the quarter. However, organic sales grew an estimated 7.6%, as currency effects negatively impacted top-line results. Excluding Illumina, combined quarterly revenues grew 0.3%, or 5.6% organically. Illumina recorded double-digit sales growth, while pro forma Thermo Fisher Scientific Life Science Solutions and Bruker Scientific Instruments (BSI) reported sales declines as a result of currency and divestments. BSI and Waters’s revenue growth were most impacted by currency changes.

Total operating profits for the six businesses increased 8.9%, led by double-digit growth for PerkinElmer and Illumina. Excluding Illumina, operating profits for the businesses improved 4.0%. Currency reduced BIS operating profit by roughly 9%. Agilent’s operating profit was impacted by manufacturing issues.

Pharmaceutical and biotech sales remained strong in the fourth quarter 2014 for Agilent, Thermo and Waters. Partially offsetting this growth was another quarter of softness for industrial sales, as reported by Agilent, BSI and Waters. Food-safety demand remained healthy for Agilent and PerkinElmer, while Bruker reported good demand from the food sector for its Optics division. Results for the academic and government sector were mixed, with Thermo and Waters reporting sales strength.

Product highlights included services, next-generation sequencing (NGS) and MS. Agilent, PerkinElmer, Thermo and Waters each reported strong growth for instrument service and support. NGS-related sales benefited Agilent, Illumina and Thermo. In contrast, sales declined in the quarter for Waters’s TA Division, BSI’s high-field NMR business and Illumina’s microarray products.

Regionally, Chinese demand continued to stabilize, according to Agilent, PerkinElmer and Waters. However, other Asian nations, particularly Japan, lagged, as reported by Agilent and Thermo. Among major regions, the US posted the strongest growth, according to Bruker, PerkinElmer, Thermo and Waters.

For the five businesses posting year-end results in the fourth quarter 2014, combined revenues increased 4.3%, or 5.9% organically. Illumina recorded growth of more than 30%, while BSI sales declined. Excluding Illumina, annual revenues for the four businesses increased 1.4%, or 3.4% organically. For calendar year 2014, the combined operating profits for the five businesses rose 9.9%, helped by productivity improvements at PerkinElmer and Thermo. Excluding Illumina, operating profits increased 4.8%.

For 2015, currency effects are expected to have a negative impact of around 5% on revenue growth and to adversely affect operating profits. Demand in most markets is expected to remain the same, with growth for new products and service. The summaries on pages 9–11 are based on company financial reports, conference calls and SEC filings.

Agilent Technologies

Agilent fiscal first quarter organic sales grew 5.8% to $1,026 million. The three new business units are Life Sciences and Applied Markets (LSA), Agilent Crosslab (AC), and Diagnostics and Genomics (DGG). Organic sales in the Americas, Asia Pacific and Europe grew 3.3%, 4.0% and 9.6% to account for 33%, 32% and 35% of sales, respectively. Organic sales in China grew in double digits. Japanese sales fell 6%. Adjusted operating income slipped less than 1% to $139 million as a result of currency and DGG manufacturing issues.

Quarterly sales for Agilent’s analytical-lab business, which consists of LSA and AC , grew 3.2%, 6.9% excluding currency, to account for 86% of revenues. Pharmaceutical and biotechnology sales expanded 6%. Food and environmental sales climbed 5% and 4%, respectively, led by demand in China. Academic and government sales improved 1%. Chemical and energy sales were flat. Forensics sales declined 2%. Sales were strong for sample preparation, especially QuEChERS, as well as for consumable supplies, columns and services. DGG sales contracted 5.7%, 0.6% organically, because of manufacturing issues within the nucleic acid businesses. Sales of companion diagnostics, target-enrichment products and pathology instruments were strong. Given currency headwinds, Agilent lowered its fiscal 2015 revenue forecast by roughly 1.5% to $4.06–$4.12 billion for reported growth of 1.0%, or 6.9% organically.

Bruker Scientific Instruments

Fourth quarter 2014 Bruker Scientific Instruments (BSI) organic sales improved 0.6% to account for 94% of sales (see page 12). BSI adjusted operating profit fell 12.2% to $65.4 million due to lower gross margin and sales volume.

Full-year BSI sales declined 2.0%, 0.7% organically, to $1.68 billion. Currency reduced sales growth by 1.5%, while acquisitions net of divestments added 0.2%. Organic System sales declined 4%, and Aftermarket revenue grew 11% to make up 79% and 21% of BSI sales, respectively. Despite weak demand for high-field NMR, BioSpin sales grew more than 1% organically, led by double-digit Preclinical Imaging sales and growth in the Americas. CALID sales contracted, including a 22% decline for CAM sales to roughly $80 million, including a loss of $8 million from the divestments (see IBO 8/15/14, 10/15/14). Daltonics, formerly Life Sciences and Clinical, grew in the low single digits organically, led by more than 20% sales growth for the MALDI Biotyper. Optics sales were strong in the Americas and Europe as demand in food and agriculture markets improved. Detection revenue declined sharply because of continued export-license delays. Sales for Nano, formerly Materials, declined due to soft demand from industrial and semiconductor customers, especially in Asia. Given this, along with reduced demand in Russia, both AXS and Elemental sales declined. Improved demand in academic and research markets resulted in higher growth for Nano Analytics and helped sustain flat growth for Nano Surfaces. BSI adjusted operating profit fell 10.1% to $173.5 million.

For Bruker, organic sales grew in the low single digits in the Americas and were roughly flat in Europe. Organic sales fell in the mid-single digits in Asia. Chinese sales were modestly lower. Bruker’s 2015 reported sales are projected to decline by double digits but grow 1% organically.

Illumina

Illumina fourth quarter 2014 sales climbed 32% organically to $512.4 million. Product sales grew 34%, and Service and Other revenue climbed 12% organically to account for 88% and 12% of sales, respectively. Sales to the Americas, Europe and Asia grew 34%, 33% and 8%, respectively. Adjusted gross profit margin improved 85 basis points to 71.7% of sales. Adjusted operating income climbed 62.4% to $512.4 million.

Illumina’s fourth quarter 2014 sequencing sales climbed 48% to make up approximately 80% of revenues. Sequencing instrument sales soared 93%. NextSeq orders grew 15% sequentially, driven by oncology customers. HiSeq X Ten orders totaled 37 units for cumulative bookings of 201 units. MiSeq orders and shipments each exceeded 300 units, driven by new customers in clinical markets, especially for HLA typing and cystic fibrosis testing. The firm shipped roughly 90 HiSeq 2500 systems, similar to a year ago. Sequencing consumables revenue expanded 32%. Despite lower pricing, revenues for sample preparation products increased because of stronger volume. Sequencing service revenue benefited from acquisitions and increased service contracts. Volume for noninvasive prenatal sample testing grew 31% sequentially. Microarray sales declined 11% primarily due to competitive pricing and lower consumables revenue.

Illumina 2014 sales jumped 31.0%, 29% excluding acquisitions, to $1.86 billion. Product sales grew 28%, and Service and Other revenue climbed 35% organically to make up 87% and 13% of sales, respectively. Sales to commercial, nonprofit and hospital customers made up 55% of sales. Roughly 30% of instrument placements were to clinical labs. Oncology sales, both research and clinical, grew 40%. Reproductive- and genetic-health sales climbed 47%, with a 36% increase in IVF sales. Sales to the US, Europe and Asia grew 33.0%, 31.5% and 24.0% to account for 51%, 25% and 18% of revenues, respectively. Sales to Other Markets improved 34.5% to make up 5%. Adjusted gross profit margin rose 154 basis points to 71.2% of sales due to product mix. Adjusted operating profit grew 49.8% to $533.7 million. Full-year llumina sequencing revenues grew roughly 44% to make up 80% of sales. Sequencing instrument sales grew roughly 60%, as the company shipped 134 HiSeq X Ten units. Sequencing consumables sales climbed roughly 34%. Despite a 5% increase in volume of samples, microarray sales declined 6%.

PerkinElmer

Adjusted fourth quarter 2014 PerkinElmer sales grew 5% organically to $608.6 million. Software and services accounted for roughly 35% of revenues. Organic sales in the Americas grew in the high single digits. Organic sales in Europe and Asia each grew in the mid-single digits. Adjusted gross margin expanded 30 basis points to 49.5% of sales. Productivity initiatives and lower R&D spending helped boost adjusted operating income 13.1% to $130.6 million.

PerkinElmer Human Health (HH) fourth quarter 2014 sales were led by demand for newborn-screening and infectious disease testing in emerging markets and higher US birth rates. Diagnostic sales were negatively impacted by medical imaging. Research sales were driven by new products and higher pharmaceutical and academic sales, which grew in the mid-single digits and low single digits, respectively. Sales of in vivo–imaging and radiochemical products were slow. Research sales in Europe grew in the mid-single digits, low single digits in the Americas and declined slightly in Asia Pacific, in spite of strong demand in China. HH adjusted operating profit climbed 12.3% to $95.7 million due to product mix and reduced expenses.

PerkinElmer Environmental Health (EH) sales grew 7% organically as a result of its Lab Services business and improved demand for analytical instruments, which grew roughly 5% organically to account for 25% of company sales. Environmental and Safety sales grew roughly 6% organically, led by demand from food and safety markets, especially in China. Industrial sales grew roughly 3% organically. EH adjusted operating income advanced 5.9% to $43.2 million.

Full-year adjusted and organic sales for PerkinElmer each increased 4% to $2.24 billion. Acquisitions contributed 1% to growth but were offset by currency. Reported Product and Service revenues grew 2.8% and 5.7% to make up 69% and 31% of sales, respectively. Reported sales to the US and China grew 2.7% and 8.4% to account for 38% and 12% of sales, respectively. Sales to several European regions were also strong, but UK sales were flat to make up 6% of sales. Japanese sales declined slightly due to currency to account for 4%. Adjusted gross margin slipped 20 basis points to 47.7% of sales because of currency, pricing pressure and product mix. Adjusted operating income climbed 13.7% to $394.6 million as a result of completed restructuring efforts.

Full-year HH sales grew 3.1%, 4% organically, to $1.25 billion due to Diagnostics sales, but weak academic spending in Europe and lower licensing revenue from expired patents hindered Research sales. Informatics, radiometric-detection and high-content-screening product sales grew. HH adjusted operating profit rose 12.8% to $300.8 million. Full-year organic EH sales grew 4%, and adjusted operating profit expanded 10.0% to $131.0 million. For 2015, organic Diagnostics and Research sales are expected to grow roughly 3% and 7%, respectively.

Thermo Fisher Scientific Life Science Solutions and Analytical Instruments

Thermo Fisher Scientific reported stronger-than-expected fourth quarter 2014 organic Life Science Solutions (LSS) sales growth due to pharmaceutical and biotech spending, and US and European government customers. Including Life Technologies from the beginning of 2013, pro forma organic LSS sales climbed 7.0% to $1.19 billion to account for 26% of revenues. Sales were strong for bioproduction, qPCR, cell biology and next-generation sequencing products. With the inclusion of Life, LSS adjusted operating income jumped 29.4% to $364.9 million.

For the fourth quarter 2014, Thermo’s Analytical Instruments (AI) sales grew 5.0% organically to $902.4 million to make up 20% of sales. Demand was strong for services and life sciences MS. Chromatography sales were also strong due to US government spending. AI adjusted operating income was flat at $180.2 million.

Thermo 2014 LSS revenue grew 3.7% on an organic pro forma basis to $4.20 billion to account for 25% of revenues. Sales were driven by biosciences and bioprocess-production products, partially offset by lower licensing revenues. LSS adjusted operating income was $1.21 billion, or 29.0% of sales. AI 2014 revenue grew 3.1%, 3.6% organically, to $3.25 billion to make up 19% of sales. Acquisitions added 0.5% to sales growth, while currency lowered growth by 0.9%. Sales were driven by strong demand for chromatography and MS as well as higher sales of environmental instruments. Sales of chemical-analysis products declined due to weak demand from commodity markets. AI adjusted operating income expanded 4.0% to $581.1 million.

Waters

Waters fourth quarter 2014 sales grew 8% organically to $583.9 million. Instrument and recurring sales grew 6% and 10% excluding currency to account for 56% and 44% of revenues, respectively. Sales were driven by strong replacement demand from pharmaceutical customers, as well as improved sales in Europe and China. Currency-neutral sales in both the US and Europe grew 10%. Asian sales, excluding Japan, grew 8%, and Japanese sales were flat. Gross margin improved 60 basis points to 60.1% of sales. Adjusted operating profit grew 6.5% to $193.3 million.

Waters Division revenue grew 10% organically in the fourth quarter 2014. Sales in China, the US and Europe grew 13%, 12% and 10%, respectively. Sales in India jumped more than 20%. Japanese sales were slightly higher excluding currency. Organic TA Division sales fell 5% due to weaker-than-expected conversion of orders to sales in China and slow demand from industrial customers.

Full-year sales for Waters grew 6% organically to $1.99 billion. Recurring and instrument sales grew roughly 8% and 4% organically to make up 48% and 52% of revenues, respectively. US sales grew 8% to account for 30% of revenues. European sales grew 6% excluding currency to make up 31% of sales. Sales in Asia grew in the low to mid-single digits organically to account for 32% of revenues. Within Asia, currency-neutral sales in China were roughly flat, and Japanese sales grew 4% to make up 12% and 8% of revenues, respectively. Adjusted operating income climbed 4.6% to $561.7 million.