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Thermo's Q4 Revenues Inch Up 1 Percent, Expects '09 Decline

NEW YORK (GenomeWeb News) – Thermo Fisher Scientific today reported that its fourth-quarter revenues increased 1 percent, including a negative impact from currency translation of 4 percent and a 1 percent benefit from acquisitions.

The firm brought in revenues of $2.65 billion for the three-month period ended Dec. 31, compared to revenues of $2.62 billion for the fourth quarter of 2007. Sales for its Analytical Technologies segment declined 1 percent to $1.14 billion from $1.15 billion year over year, while sales for its Laboratory Products and Services segment increased 9 percent to $6.45 billion from $5.91 billion.

Thermo Fisher posted a profit of $290.2 million, or $.68 per share, up 21 percent over net income of $239.8 million, or $.54 per share, for the fourth quarter of 2007.

Its R&D costs dropped slightly to $60.9 million from $61.4 million, while its SG&A spending fell around 2 percent to $545.4 million from $558 million.

For full-year 2008, Thermo Fisher generated revenues of $10.5 million, up 7 percent from revenues of $9.8 billion in 2007. Sales for the Analytical Technologies segment increased 7 percent to $4.47 billion from $4.18 billion for 2007, while sales for the Laboratory Products and Services segment had 2008 revenues of $6.45 billion versus $5.91 billion for 2007.

Thermo Fisher's profit for the year was $994.2 million, or $2.29 per share, up 31 percent from a profit of $761.1 million, or $1.72 per share.

Its R&D spending for 2008 was $249.1 million, up 4 percent from $238.7 million in 2007. Thermo Fisher's SG&A spending rose around 5 percent to $2.21 billion from $2.1 billion.

The firm finished the year with $1.28 billion in cash and cash equivalents.

Marijn Dekkers, president and CEO of Thermo Fisher, said in a statement that the Q4 and full-year 2008 results were solid "in spite of the economic headwinds that continue to put pressure on capital spending in some of our end markets. Our performance is largely the result of our favorable product mix, with two-thirds of our revenues coming from recurring sales of consumables and services that tend to hold up better in an uncertain environment."

He added during the firm's conference call this morning that the firm has "built a portfolio that is rich with consumables and services, and we feel that as a result our revenues will withstand the test of this tough economic time better than most other companies."

He noted that many large pharmas, which tend to be conservative with capital spending, have tightened their R&D spending in the past few months, and there is now some industry consolidation taking place. "In spite of this, our revenue to large pharma in the fourth quarter are still growing faster than our company average," said Dekkers.

He said that with biotech customers, Thermo Fisher is seeing "a little bit of a mixed picture, with large biotech continuing to do very well, but biotech startups becoming somewhat more conservative in their spending."

Meanwhile, industrial markets, which is the market where Thermo Fisher sells the largest proportion of big-ticket instruments, "are the most problematic at the moment," said Dekkers. He said that with the exception of the food and beverage markets, orders are soft across all of the other industrial segments the firm serves.

Thermo Fisher officials said they expect the firm to achieve revenues of $10 billion to $10.3 billion for 2009, a 2 percent to 5 percent decline compared to 2008. That includes an expected negative impact from currency translation of 4 percent. The firm also expects to post EPS of between $3 and $3.30 for the year.

"Looking to 2009, the economic climate will likely continue to restrain capital budgets, especially through the first half of the year," Dekkers said. Similar to comments from Illumina last night, Dekkers said that it is too early to speculate about what impact an economic stimulus package would have on the firm's revenues this year.

In early Wednesday trade on the New York Stock Exchange, shares of Thermo Fisher were up 4 percent at $38.06.

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