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Life Science, Applied Markets Continue to Drive Revenue Gains for Agilent in Q4

This story originally appeared in Biocommerce Week, a newsletter that has been discontinued.
Agilent Technologies said last week that fiscal fourth-quarter revenues for its Bio-Analytical Measurement segment rose 24 percent, including revenues from Stratagene, which the company bought in June for around $246 million (see BioCommerce Week 6/13/2007).
The firm’s life sciences sales were particularly strong in the quarter ended Oct. 31, rising 30 percent year over year, or 17 percent excluding Stratagene’s contribution. Meanwhile, applied markets, such as environmental and food testing, helped drive double-digit growth for Agilent’s chemical analysis products.
Revenues for the firm’s Bio-Analytical Measurement segment, which includes its life sciences and chemical analysis businesses, increased to $558 million from $450 million year over year. Excluding Stratagene’s sales, revenues for the segment rose 19 percent over the previous year’s third quarter.
“We’re seeing sustained momentum in our LC and LC-MS systems, columns, microarrays, and related services,” Agilent CEO Bill Sullivan said during the firm’s fourth-quarter conference call. He added that Agilent saw “strong demand” from the pharmaceutical, academic, and government markets.
He said that although the firm doesn’t have an outlook specific to US pharma spending in 2008, “it is our expectation … that the investment around the world in pharma and biologics will continue,” said Sullivan.
CFO Adrian Dillon noted during the call that sales to the pharma and biotech markets grew 16 percent year over year, while sales to the academic and government markets increased 25 percent organically and more than doubled when including Stratagene’s contribution.
Sullivan added during the question and answer portion of the call, “In think the data is very clear that the introduction of our mass spec, our introduction of our new LCs [and] our new GCs, has been favorably received by our customers in the marketplace.”
Revenue from the segment’s chemical analysis products rose 20 percent to $322 million, driven by growth in the food safety, environmental, and petrochemical markets. Dillon said that revenues in the environmental end market were up more than 30 percent year over year, while food safety sales increased 18 percent.
“We saw governments in China, Malaysia, and India continue to invest in testing capacity for pesticides, veterinary drugs, product adulteration, as well as microtoxin testing,” said Dillon.
“The opportunity in the food and petrochemical [markets] in China continues to grow rapidly,” said Sullivan. “What has changed recently is the increased investment in pharmaceutical.”
He noted that China has a new head of its pharmaceutical regulatory agency, which is helping accelerate investment there.
Sullivan said that he “wouldn’t suggest” that Agilent’s revenue growth in the food testing field will continue at the level seen in the fourth quarter. “However, there is a lot of opportunity in the food industry given the issues we have,” he said. For example, he noted that only 1 percent of the food imported into the US is currently tested.
Operating income for the Bio-Analytical Measurement division increased 32 percent to $120 million from $91 million in the prior-year period.
Sullivan said the Bio-Analytical Measurement segment “had solid performance across all geographies, particularly China, India, and Europe.” Sales in the Americas and Europe were both up 23 percent and sales in Asia were up 27 percent, Agilent officials said.
Flat Electronic Measurement Sales Temper Results
Overall, Agilent reported fourth-quarter revenue of $1.45 billion, up 9 percent from revenue of $1.3 billion in the comparable quarter a year ago.
The firm's Electronic Measurement segment had 1 percent revenue growth to $912 million, compared with $904 million in the comparable quarter a year ago. “Solid growth in the aerospace and defense and wireless R&D segments was offset by declines in computer and semiconductor [segments],” said Sullivan.

“It is our expectation … that the investment around the world in pharma and biologics will continue.”

He said that, overall, the company had a “good” quarter, “especially considering the continued divergent trends of our markets.”
Agilent posted net income of $180 million, or $.46 per share, a 21 percent jump from net income of $149 million, or $.36 per share, in last year's Q4.
Agilent’s R&D spending rose nearly 12 percent to $174 million from $156 million.
For its fiscal year 2007, Agilent reported revenue of $5.4 billion, a 9 percent increase over 2006 revenue of $5 billion. Its net income dropped 81 percent to $638 million, or $1.57 per share, from $3.3 billion, or $7.50 per share, last year.
Last year’s results included a $1.8 billion gain from the sale of the firm’s semiconductor products business and a $900 million gain related to the sale of its 47 percent stake in Lumileds to Philips (see BioCommerce Week 8/18/2005).
Agilent’s R&D spending increased 5 percent for the year to $685 million from $655 million. The firm finished the fiscal year with $1.8 billion in cash and cash equivalents.
Agilent estimated that revenues for the first quarter of fiscal year 2008 will be in the range of $1.35 billion to $1.40 billion, up 5 percent to 9 percent from last year.
Agilent also said that its board of directors has authorized a share-repurchase program for up to $2 billion worth of common shares over the next two years. The firm completed a previous $2 billion buyback plan last month, bringing its total share repurchases to $6.466 billion since it began the program in 2005.

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