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Sigma-Aldrich Q3 2011 Sales Up 11% Over Q3 2010
Posted: October 25, 2011
Sigma-Aldrich reported its third quarter 2011 financial results, with sales increased 11% over third quarter 2010 to $626 million. The company reported its research products and fine chemicals (SAFC) divisions’ sales growing organically by 4% and 2%, respectively, and recently completed acquisitions contributed an additional 2%, with changes in foreign currency exchange rates contributed an additional 5% to reported sales growth. Additionally, the company’s third quarter 2011 net income clocked in at $117 million, up 26% from third quarter 2012, diluted EPS was $0.95, up 25%, and year-to-date 2011 net cash provided by operating activities and free cash flow were $373 million and $300 million, respectively.
The company's research business reported sales of growth of 13%, led by the Asia-Pacific/Latin America region, while the SAFC business reported an organic increase of 2% to $180 million, reflecting a very strong 2010 comparable base. The operating income margin in the third quarter of 2011, excluding restructuring charges, was 26% of sales compared to 25.4% of sales in the third quarter of 2010, and operating margins benefited from strong gross margins, as well as a containment of operating expenses. Reported operating income margin for the third quarter of 2011 was 25.6% compared to 23.4% in 2010, but the operating income margin in 2010 was impacted by both restructuring and impairment charges.
Additionally, worldwide sales of research products through the company's website as a percentage of total research sales were 50% for the third quarter of 2011, consistent with the performance in the first half of 2011 and up from 48% achieved for all of 2010. Sales in international markets (Asia- Pacific and Latin America) continued to show strength with reported and organic growth of 22% and 9%, respectively, in the third quarter of 2011, and in the company's focus markets of China, India and Brazil, sales collectively grew 46% and 25% on a reported and organic basis, respectively, for the third quarter of 2011. And SAFC's booked orders for future delivery at Sept. 30, 2011 were up 3% from the June 30, 2011 level and up 6% from the Sept. 30, 2010 level.
Commenting on third quarter 2011 performance, Sigma-Aldrich president and CEO Rakesh Sachdev said, "Our reported sales of $626 million met our expectations. Consistent with earlier quarters in 2011, we delivered solid performance with organic sales growth in our expected mid single digit range and a mid-teens percentage increase in diluted adjusted EPS. Our organic sales growth for our research business in Q3 was right in line with earlier quarters at 4%. Our overall dollar sales in Q3 for SAFC remained strong at $180 million, consistent with prior quarters of 2011. Diluted adjusted EPS of $0.96 for the third quarter of 2011 exceeded our expectations due to a lower than expected effective tax rate and stronger adjusted operating income margins.
“While we are pleased with the 4% organic growth in our research business in the third quarter, the economic and research funding uncertainties in the US and Europe are creating a cautious climate with some of our customers. With our continued focus on the faster growth segments in analytical chemistry, biology and material science, coupled with our achievements in the emerging markets, we remain cautiously optimistic in achieving organic growth in the low- to mid-single digits in our research business in the fourth quarter.
“As expected, the growth rate for SAFC in the third quarter was in the low single digits due to a strong comparable in the previous year. We were pleased with the sales level we achieved particularly from our hitech and industrial media businesses. With the investments we are making this year in these businesses, we are well positioned to take advantage of the growth in these markets.
“In our focus markets of India, China and Brazil in the third quarter of 2011, we collectively grew by 25%—our best result in 2011. Currency adjusted growth for these key markets including our May 2011 acquisition of Vetec Quimica Fina Ltda in Brazil was a combined 41% in Q3."
Sachdev concluded, "We have reaffirmed our organic sales growth expectation for 2011 in the mid-single digits. We have revised our diluted adjusted EPS outlook for 2011 to $3.73 to $3.81 to reflect stronger operating results and a lower than expected annual effective tax rate for 2011 that should help offset the negative impact of recent moves in currency exchange rates."