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Zurich, Switzerland, 30 April 2002 – Tecan, a leading player in the Life Science supply industry, reported today sales of CHF 85.3 million for the first quarter of 2002, compared with CHF 84.2 million in the same period of 2001. This represents an increase of 1.3% or 3.0% in local currencies. Operating profit reached 15.8% of sales at CHF 13.5 million (2001: 17.6% or CHF 14.8 million). Net profit for the first quarter amounted to 11.6% of sales at CHF 9.9 million (2001: 13.2% and CHF 11.1 million).
“The lower than expected revenues for the first quarter reflect a general slowdown in the Life Science market which is being experienced by many sectors of the industry. As a result of this slowdown, customers are postponing investment decisions and delaying orders. Although our sales so far this year represent the strongest first quarter sales result in our company’s history, it is clear that our revenues in all business areas have been affected by uncertainties in the business. The low sales growth reported for the first quarter also reflect a strong baseline effect as first quarter sales in the year 2001 were exceptionally high,” said Emile Sutcliffe, CEO of the Tecan Group.
Mr. Sutcliffe added: ”We have been able to reduce our cost structure compared to the fourth quarter of last year. This cost stabilisation program will remain in effect until we will see an improvement in the business outlook for 2002. We believe we are in a strong position to benefit from an upturn in the market as and when it occurs particularly in view of the strength of our upcoming product development pipeline and forthcoming launch of new applications.”
Single digit growth rates in all markets
The areas of Genomics/Proteomics, Drug Discovery and Diagnostics had comparable growth rates in the first quarter of 2002. Sales in Genomics/Proteomics increased by 2.1%, or 3.8% in local currencies, to CHF 19.3 million in the first quarter of this year (2001: CHF 18.9 million). Drug Discovery sales amounted to CHF 28.5 million, an increase of 2.9%, or 4.8% in local currencies (2001: CHF 27.7 million).
Diagnostics sales reached CHF 37.5 million, a decrease of 0.3% or an increase of 1.4% in local currencies, over the same period last year (2001: CHF 37.6 million). The sales performance of the Diagnostic business area is very positive taking into account a very strong baseline effect. First quarter sales in the year 2001 benefited from strong sales of the Genesis FE 500 workcell, as well as from the development of new corporate accounts, which led to an impressive performance in 2001.
Slowdown in the United States, continued growth in Europe and Asia
The United States, Tecan’s largest geographical market by location of customers, experienced a slowdown as sales declined by 2.1% in both Swiss francs and in local currencies to CHF 41.2 million (2001: CHF 42.1 million). In contrast, sales in Europe increased by 7.6%, or 10.5% in local currencies, during the first quarter 2002 to CHF 32.5 million (2001: CHF 30.2 million). Sales in Asia increased by 8.3% (16.4% in local currencies) to CHF 7.8 million from CHF 7.2 million in the first quarter of 2001. Sales in the remaining markets (rest of the world) declined by 19.1% (or 17.4% in local currencies) to 3.8 million (2001: CHF 4.7 million).
Stable gross margin, lower operating expenses, and lower operating profit
Tecan’s gross margin remained stable at a high level of 69.3% of sales (2001: 68.7%) and indicates that Tecan was able to maintain the price level for its products. Tecan’s gross profit at CHF 47.8 million was slightly lower than one year ago (2001: CHF 49.0 million), which reflects the under utilisation of some of the company’s production capacity.
Compared to the fourth quarter 2001, which represented Tecan’s best quarter ever, operating expenses were reduced to CHF 45.6 million, due to the continued implementation of Tecan’s cost stabilization program. The increase in general and administration costs, to CHF 9.8 million or 11.5% of sales, includes expenses for the installation of new business processes and systems and a one time charge for the implementation of a new business structure. Operating profit reached CHF 13.5 million, or 15.8% of sales, during the first quarter 2002, compared to CHF 14.8 million, or 17.6% of sales, a year earlier, reflecting the added general and administration increase and the lower gross profit margin attained.
The income tax rate for the first quarter 2002 could be reduced to 29.0%, compared to 32.5% in the first quarter of last year. Tecan’s net profit for the first quarter reached 11.6% of sales at CHF 9.9 million (2001: 13.2% and CHF 11.1 million).
We are clearly seeing signs of weakness in all of the four segments of the market that we compete in. The first quarter results published so far from key players in the Life Science supply industry is proof of this widespread slow down. However, we remain confident that we will achieve a growth rate that is higher than the expected market, as a consequence of our strong pipeline of new products which will be introduced throughout this year, especially in the second half. This represents a 50% increase in new product launches than last year, reflecting our continued strong commitment to R&D, which reached last year a record 12.2% of sales.
Tecan (www.tecan.com) is a leading player in the fast growing Life Sciences supply industry that specializes in the development, production, and distribution of solutions enabling the discovery of pharmaceutical substances, as well as for genomics, proteomics, and diagnostics. Tecan clients are leading pharmaceutical and biotechnology companies, university research departments and diagnostic laboratories. Founded in Switzerland in 1980, the company has manufacturing, research and development sites in both North America and Europe and maintains a sales and service network in 52 countries. In 2001, Tecan achieved sales of CH 361.9 million (USD 214.1 million; EUR 239.6 million). Registered shares of Tecan Group are traded on the Swiss SWX stock exchange (TK: TECN / Reuters: TECZn.S / Valor : 1210019).
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