Second quarter April - June 2013
Group net sales in the second quarter 2013 decreased by 4.9 percent to 116.3 MSEK (122.3). At comparable exchange rates sales increased by 4.6 percent.
Operating profit in the quarter amounted to 12.1 MSEK (12.9).
The result after tax amounted to 12.9 MSEK (13.2).
Earnings per share amounted to 0.19 SEK (0.18).
The cash flow from operating activities amounted to 7.1 MSEK (15.2).
Net cash at June 30 amounted to 82.7 MSEK, compared to 154.0 MSEK at March 31.
Dividends to the shareholders were paid in May to the amount of 34.9 MSEK (29.3).
After the resolution at the Annual General Meeting on April 25 to cancel all 3,394,375 shares repurchased during previous repurchasing programs the number of shares in Biotage totals 69,861,330.
At the end of the reported period Biotage had a holding of 3,670,029 own shares acquired during the repurchasing program decided at the 2013 AGM. After the end of the reported period an additional 25,025 shares have been repurchased, for a total of 3,695,054 shares at the time of this report.
First six months January - June 2013
Group net sales in the first six months 2013 decreased by 9 percent to 219.6 MSEK (241.9). At comparable exchange rates sales decreased by 1 percent.
Operating profit in the six month period amounted to 18.1 MSEK (21.5).
The result after tax amounted to 16.0 MSEK (21.1).
Earnings per share amounted to 0.23 SEK (0.29).
The cash flow from operating activities amounted to 22.3 MSEK (32.4).
Net cash at June 30 amounted to 82.7 MSEK, compared to 165.4 MSEK at December 31, 2012.
Comments by CEO Torben Jörgensen
It’s satisfying to note that we are growing organically, both compared with the last quarter and with the corresponding quarter last year. The sales in Europe in the second quarter exceeded our expectations. Already at the start of the second quarter we could see that we would receive many of the European orders that we had expected to get in the first quarter.
The US sales have not developed so positively. We are still hurting from the lack of funding primarily by our academic customers. Japan is still developing reasonably well. The negative development of the Japanese yen compared to the Swedish currency results in decreasing margins, however. The Chinese market for contract manufacturing of pharmaceuticals and services to the pharma industry is under pressure and this also affects Biotage. Historically these customers have contributed a large share of our sales in this market. Our reinforced sales force in China is now targeting new customers in the academic segment and in other customer segments such as analytical chemistry. In a somewhat longer perspective these efforts will result in a better distribution of sales between the different customer segments.
The currency development has been unfavorable for Biotage. Comparing the sales reported for the quarter with the corresponding period last year we see a 4.9 percent decrease. However, at comparable exchange rates the underlying operations show a growth by 4.6 percent. The currency effect in a comparison between second quarter sales in 2012 and 2013 amounts to no less than –11.6 MSEK. The weakening of the Japanese yen is the major factor.
The operating margin for the quarter amounts to 10.4 percent, which I find satisfying under the present circumstances. For the first six months we report an operating margin of 8.1 percent and on a rolling 12 month basis we achieve 9.1 percent.
Our single largest product area, purification, continues to develop well globally. The combined flash and mass detector instrument Isolera™ Dalton which was launched commercially in May further strengthens our market position in this product area. The launch has created great interest in the market and we sold a number of instruments already in June.
Instruments make up 42 percent of the sales and consumables 58 percent. True, this relation has developed in the wrong direction with regard to the strategic target that aftermarket sales should contribute at least 60 percent, but this is mainly due to good sales of purification systems after the launch of Isolera™ Dalton and a successful marketing campaign for Isolera™ Four in Europe. A larger share of instrument sales is also the main factor behind the decrease of the gross margin to 56.6 percent. Our long-term goal is an average gross margin of 60 percent. On a rolling 12 month basis we are at 58.3 percent.
In the product area Industrial Resins we have gained several new customers, at the same time as we continue working with our existing customers. Earlier this year our subsidiary MIP Technologies submitted an application to American FDA concerning approval of one of the company’s substances for use in food production. The approval process has been delayed following issues raised by the FDA. The application has now been withdrawn as part of the administrative process. Together with one of our customers we are now penetrating the issues. We then intend to resubmit the application.
In the third quarter the manufacturing of the products acquired in 2010 from Caliper Life Sciences, Inc. will be moved to our plant in Cardiff, Wales. Up until now Caliper has handled the manufacturing. This means that we will now improve our margins on these products. In order to ensure good preparedness for delivering, test production took place this quarter with good result.
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