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Sigma-Aldrich 3Q Profit Falls on Order Timing, Currency Exchange
Posted: October 23, 2012
Sigma-Aldrich Corp.'s third-quarter profit fell 4.3%, hurt by the timing of orders and foreign currency exchange rates.
However, the company expects full-year 2012 overall organic sales growth for 2012 to be about 3%, within its prior outlook of low-to-mid single digit growth. It also backed its earnings outlook of $3.80 to $3.90 a share, excluding certain items.
For the quarter ended Sept. 30, net income fell to $112 million from $117 million a year earlier. Still, third-quarter sales rose 2% to $639 million from $626 million a year ago, with research and Sigma-Aldrich Fine Chemicals organic sales growth of 1% and 5% respectively. Acquisitions contributed 6% to sales growth, although changes in foreign currency exchange rates hurt sales by 6%. Excluding changes in foreign currency rates and acquisitions, organic sales growth was 2%.
Asia Pacific and Latin America continued to be the leading geographic region for sales growth with mid-single digit growth. Europe grew in the low-single digits and North America was flat.
Third-quarter research organic sales growth was 1%, led by strong sales of analytical products offset by a decline in sales of chemistry products as a result of continued pharma consolidation. Meanwhile, SAFC organic sales growth was 5%, led by double-digit growth in the custom pharma manufacturing business, offset by timing issues in bioscience and late-quarter order adjustments and pricing declines in Hitech.
Sigma-Aldrich said SAFC sales were below the company’s expectations, and a reminder that business can fluctuate quarter to quarter. Third-quarter results were impacted by the timing of a few large orders including a large industrial cell culture media order, which slipped into the fourth quarter, among other late-quarter changes to orders.
Although the company expects sequential improvement in organic sales growth for SAFC for the fourth quarter. “We continue to monitor end market dynamics and are confident in our ability to enact further cost reduction actions, if necessary. Other than increased Hitech pricing and demand fluctuations, our end markets have generally remained stable since the second quarter,” said Rakesh Sachdev, Sigma-Aldrich's president and CEO.