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Bioprocess Difficulties Hit Millipore's Q4 Top-Line Growth

This article has been updated to include comments from Millipore's conference call.
NEW YORK (GenomeWeb News) – Millipore yesterday announced fourth-quarter revenues of $405.2 million, up 6 percent from revenues of $383.1 million in the fourth quarter of 2006. However, excluding a 6 percent benefit from foreign exchange, its revenues were flat year over year.
Millipore said that excluding currency effects, its Bioscience division’s revenue grew 6 percent year over year, while sales for its Bioprocess division declined 4 percent.
Martin Madaus, chairman and CEO of Millipore, said during a conference call last night that 2007 was “an important year” for the Bioscience division. “We completed the integration of Serologicals, we rolled out a new sales organization, [and] launched a new website and new e-business platform. We [also] significantly expanded the portfolio of products that we can sell into our customer base.”

Though its top line was hurt by the Bioprocess division’s contribution, Millipore’s net income for the quarter rose sharply year over year to $45.1 million, or $.81 per share, from $18.5 million, or $.34 per share.

The firm’s R&D costs climbed 13.4 percent to $27.1 million in the quarter compared to $23.9 million in the comparable quarter a year ago. Its SG&A costs were virtually flat year over year at $122.7 million versus $122.2 million last year.
For full-year 2007, Millipore’s revenues grew 22 percent to $1.53 billion from $1.26 billion in 2006. The firm’s net income for the year rose 41 percent to $136.5 million, or $2.48 per share, from $97 million, or $1.79 per share, in 2006.
The firm's R&D spending for the year rose 23.6 percent to $107 million from $86.6 million, while its SG&A costs climbed 22 percent to $486.7 million from $398.8 million.
“While we are pleased with our 2007 results overall, our fourth-quarter performance was adversely affected by a pronounced slowdown in our Bioprocess business,” Madaus said in a statement.
“A few of our largest North American biotech customers are lowering their inventories and reducing their purchases, which is negatively affecting our US sales,” he said. “We expect the lower level of spending from these customers to continue at least through the first half of 2008."
Madaus added during the call, “Our analysis of customer accounts and the market shows that this downturn will be short-term in nature and the challenges we are facing in the US are isolated to customer-specific issues" rather than industry-wide trends. He predicted that the Bioprocess division would rebound in the second half of 2008.
“Over the next few quarters, we expect that growth in our Bioscience division will help mitigate the near-term weakness we expect in our Bioprocess business until our largest customers resume more typical purchasing patterns,” he said.
“If the markets hold up in life science research like they have in '07, I think we're very much positioned with the new products, and particularly with discovery and cell biology, if we execute well we are definitely positioned for strong growth in Bioscience,” Madaus said during the call. 
Millipore finished the year with $36.2 million in cash and cash equivalents.
In Friday afternoon trade, Millipore's shares were down 7.9 percent at $64.60 on the New York Stock Exchange.

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