Thermo back to profit growth
after two consecutive quarters of contracting profits, although
revenues declined.
Thermo Electron has reported a rise in net income in the third quarter after two consecutive quarters of contracting profits. The improvement came about as a result of reduced expenses and as third-quarter revenues declined at the group compared to the same period of 2002.
Revenues fell 4 per cent to $497 million (€425m; down 7 per cent with currency factors included), while net income rose 24 per cent to $48.5 million as the cost of revenue, selling general and administrative expenses and research costs all declined.
Commenting on the results, Marijn Dekkers, Thermo's chief executive, said that the general tone of the business was improving, helped by hikes in productivity and better operating margins. The big challenge now, however, is to drive revenue growth, he added.
In the Life and Laboratory Sciences division, revenues were up slightly to $301 million, but with the currency impact were down 3 per cent, hit by weaker sales of scientific equipment and instrumentation. This was offset, however, by a better performance for clinical diagnostics and laboratory informatics.
Thermo said that orders for its new Finnigan LTQ-FT Fourier-transform mass spectrometer, introduced earlier this year, were strong. The firm expects sales to pick up now that it has opened its new demonstration centres, where customers can get a hands-on demonstration of its entire product range, in Paris, Frankfurt and Beijing.
Revenues in the Measurement and Control division, which provides products for the process industries, were $147 million in the third quarter, down from $155 million in the same period of 2002; with currency effects the decline was 8 per cent. Thermo said it has improved the focus of this division with the sale of its test and measurement business to technical components maker SPX Corp (which completed on 20 October) and the acquisition of Siemens' electronic personal dosimetry business.
Sales at the group's Optical technologies division fell to $52 million from $65 million, a 21 per cent decline before currency adjustment.
Dekkers said that Thermo is undertaking a number of initiatives to improve revenue growth. These include the ongoing initiative to bundle the Life and Laboratory Sciences division activities under a single Thermo brand to drive organic revenues in the right direction, helped by acquisitions such as the recent purchase of Jouan SA, a $92 million company specialising in sample preparation and storage.
The positive earnings trend will continue, with earnings per share rising from $0.27 in the third quarter to $0.32-$0.34 in the fourth. This puts it on track for a full-year EPS range of $1.07-$1.09, a little less optimistic than its earlier forecast of $1.07-$1.12.
