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Männedorf, Switzerland, August 13, 2009 - Despite the difficult economic environment, the Tecan Group (SIX Swiss Exchange: TECN) recorded a solid business performance in the first half of 2009. The operating profit margin was maintained at a high level of 11.5% (H1 2008: 12.6%), even with additional substantial investments in innovation projects and further expansion of the distribution capabilities and infrastructure. In the first six months of 2009, Tecan achieved an operating profit of CHF 21.1 million (H1 2008: CHF 23.1 million). Net profit reached CHF 17.2 million (H1 2008: CHF 19.0 million), with a net profit margin of 9.4% of sales (H1 2008: 10.4%). Earnings per share were CHF 1.66 (H1 2008: CHF 1.71).
With CHF 182.6 million, sales reached approximately last year’s level (H1 2008: CHF 183.6 million). Sales came in 0.5% and 0.8% below last year’s level in Swiss francs and local currencies respectively. Order entry increased by 2.9% to CHF 192.4 million (H1 2008: CHF 186.9 million) or by 2.5% in local currencies.
Thomas Bachmann, CEO of Tecan, says: “We are satisfied that we have performed well in a tough economic environment and outperformed the market relevant to our business. We responded flexibly to the challenges from various end-user markets. Once again we demonstrated strong earnings with a considerable cash flow from operating activities. Our healthy financial position enables us to make additional investments in innovation and infrastructure projects and to enter new Markets, which is our strategy for longer-term profitable growth. Over the year as a whole, we expect sales to either remain stable or to fall by up to five per cent from the previous year when measured in local currencies.”
Regional and product-specific developments
Tecan’s sales grew by 7.3% in North America. Expressed in local currencies, sales remained at the prior-year level. All customer segments contributed to sales, although they did not yet include any projects under government programs to stimulate the US economy. Tecan recorded a significant increase in order entry in North America. In Europe, sales in Swiss francs declined by 7.4% and were 2.1% below last year’s level when measured in local currencies. Business performance was mixed across the various European countries. Business serving the pharmaceutical industry was negatively impacted by the ongoing structural changes in the sector and the impact of the economic crisis. In Asia, sales rose 8.6% in Swiss francs and 6.2% in local currencies. Tecan’s strategically important worldwide OEM business accounted for 28.3% of total sales in the first half of the year (H1 2008: 29.3%). Tecan posted double-digit sales growth for consumables and the service business whose share of total sales increased to 33.9% (H1 2008:30.2%).
Information by business segment
At CHF 48.3 million, sales in the Components & Detection business segment were 1.1% above last year’s level (H1 2008: CHF 47.8 million) but 1.1% lower in local currency terms. Demand declined from a number of major components customers due to the economic crisis. New OEM contracts accounted for a greater proportion of sales of detection devices. Order entry for the first half of the year increased significantly compared with the same period last year. Due to a more efficient cost structure and higher proportion of service business, the Components & Detection business segment increased its operating profit margin from 8.7% to 10.5% of sales year-on-year.
Operating profit was CHF 5.5 million, 21.3% up on the first half of 2008 (H1 2008: CHF 4.5 million).
Liquid Handling & Robotics, Tecan’s largest business segment, generated sales of CHF 114.9 million in the first half of 2009. Sales were 6.2% and 5.6% below last year’s level in Swiss francs and local currencies respectively (H1 2008: CHF 122.5 million). In particular, the end-user business serving the pharmaceutical industry in Europe and the diagnostics business in China recorded substantial declines. The OEM business in the Liquid Handling & Robotics segment fell short of the previous year, but this should balance out again over the year as a whole. Sales from end-user business in the US and Japan, on the other hand, were higher this year than they were for the same period last year. The consumables business and service unit also performed well.
Order entry was slightly down from the first half of 2008. Due to lower sales and the aforementioned additional investments to implement the growth strategy, the operating profit margin was lower than in the same period last year reaching 16.4% of sales (H1 2008: 21.8%). Operating profit was CHF 19.0 million (H1 2008: CHF 26.9 million).
Sales in the Sample Management business segment rose by 45.4% from CHF 13.3 million to CHF 19.4 million in the first six months of 2009. This equates to an increase of 42.9% in local currencies which resulted primarily from the orders for large automated storage systems that were signed in the second half of 2008. Order entry in the first half of 2009 was significantly above the low level seen during the same period last year. Following an operating loss of CHF 4.0 million in the same period last year, Sample Management was again profitable during the first half of 2009 (CHF 0.3 million). Efforts to reduce costs and enhance processes to cope with the continued challenging market situation for large storage systems are ongoing.
Healthy balance sheet – high equity ratio
The equity ratio increased and reached 51.9% as of June 30, 2009 (December 31, 2008: 48.9%). Net liquidity (cash and cash equivalents minus bank liabilities and loans) also rose, to stand at CHF 39.1 million as of the balance sheet date (December 31, 2008: CHF 33.7 million). Thus, Tecan has continued to strengthen a very healthy balance sheet. The reduction in share capital through the cancellation of 696,788 registered shares (5.8% of the share capital), approved at the Annual General Meeting, will be carried out in the near future. Tecan had acquired these shares as part of a share buyback program. The company’s share capital will then stand at CHF 1,138,603.20, divided into 11,386,032 registered shares with a nominal value of CHF 0.10 each.
Tecan expects the company to continue to only be moderately impacted by the economic crisis. It remains hard to predict market trends over the medium term, however the experiences from the first half of the year enable the company to make a more precise full-year analysis. Tecan now expects sales for 2009 to either remain stable or fall by up to five per cent from the previous year when measured in local currencies. Assuming sales remain stable in local currencies, Tecan continues to expect an operating profit margin of 13 to 14% when including the additional projects for implementing the growth strategy. If sales in local currencies fall 5% below last year’s level, the company anticipates an operating profit margin of 11.5 to 12.5%.
A conference call discussing the results for the first half of 2009 will take place today at 10:00 am (CET). The event will also be relayed by live audio webcast, which interested parties can access at www.tecan.com. A link to the webcast will be provided immediately prior to the event.
For further information please contact:
Tecan Group Ltd.
T +41 (0) 44 922 84 30