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Zurich, Switzerland, 21 October 2003 - Tecan today reported third quarter and nine months results for 2003.
Third quarter sales 2003 reached CHF 74.5 million, a decrease of 5.5% compared with CHF 78.8 million recorded in 2002. Excluding the impact of currency, sales decreased by 2.9%. For the first nine months of 2003, sales decreased by 9.3% or by 2.6% in local currency to CHF 224.5 million.
Biopharma (Genomics/Proteomics/Drug Discovery), with sales of CHF 45.2 million, showed a contrasting picture. Sales in Genomics/Proteomics increased significantly by 22.9% in Swiss Francs, or 32.9% in local currencies, to CHF 22.2 million. On the other hand, Drug Discovery sales declined by 25.3% in Swiss francs, or 22.4% in local currencies, to CHF 23.0 million. This decrease was primarily due to the current market volatility. Diagnostics sales were consistent with previous quarters at CHF 29.3 million, a decline of 2.2% versus the third quarter 2002.
Mike Baronian, Chairman of the Tecan Board of Directors and interim CEO of the company, commented: “The current economic uncertainties continue to impact our growth. While we enjoy a continued growth in Genomics/Proteomics and benefit from a solid business in Diagnostics, we suffer from a high degree of volatility in our Drug Discovery business. We are addressing this situation by streamlining our operations and launching new products that offer our clients a superior benefit.” He continued: “We are starting to measure the positive impact of our efforts. Year to date, we were able to reduce our operating expenses by CHF 10.5 million, or 4.6% of sales, compared to 2002. As a result, and excluding unusual items, both our gross profit and our EBIT margin improved over the previous quarters to 53.9% and 13.4% of sales respectively.”
Third quarter results 2003 include two unusual items. As announced last July, Tecan will close its R&D facility in Munich during the fourth quarter 2003. This results in a restructuring charge of CHF 5.2 million. In view of Tecan’s conservative accounting policy, the company also made an impairment charge of CHF 5.7 million on its LabCD project.
Mike Baronian added: “Tecan remains committed to the LabCD, which is a very attractive value proposition for the drug discovery industry market. The slow uptake of sales, so far, is a result of being late in developing the first two assays. The first assay is already on the market and the second one will be available by the end of the year. Taking into account the positive feedback from clients, this should allow Tecan to place a minimum number of machines next year, which will trigger the consumption of the CD’s, which is the key business driver for this project. We have set strict milestones for the further development of this product and we will monitor its progress on a regular basis. In the meantime, and for prudency, we will nevertheless take this impairment charge.”
As a result of these unusual charges of CHF 10.9 million, the company reported a loss of CHF 0.09 per share in the third quarter. Excluding the unusual items, earnings per share reached CHF 0.58, a decrease of 6.5% compared with CHF 0.62 per share in 2002. The improvement in operating profit during the third quarter 2003 (13.4% of sales, excluding unusual items, versus 10.9% in 2002) was more than offset by a negative financial result. For the first nine months of 2003, earnings per share decreased by 61.2% from CHF 1.88 to CHF 0.73, or by 20.2% to CHF 1.50 per share excluding the unusual charges.
Taking into account the continued weaknesses in the Life Science industry, and the current unpredictable spending pattern, the company remains cautious in its immediate outlook for all business areas. This streamlining of its operations in Munich will improve operations by CHF 4 million per year beginning 2004. Tecan’s order book entry during the third quarter was in line with the orders registered over the last two years.
Information to shareholders
The Board of Directors would like to inform shareholders of the sad news that Hans-Jörg Kummer, Board member since 1999, passed away at the beginning of October 2003. The Board would like to express its deep condolences to his family.
Tecan (www.tecan.com) is a leading player in the 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 2002, Tecan achieved sales of CH 332.2 million (USD 212.9 million; EUR 226.0 million). Registered shares of Tecan Group are traded on the SWX Swiss Exchange (TK: TECN / Reuters: TECZn.S / Valor : 1210019).
A conference call discussing the third quarter results 2003 will take place today at 2pm (CET). This event will also be relayed by live audio web cast which interested parties may access via Tecan’s Corporate home page at www.tecan.com. A link to the web cast will be provided immediately prior to the event. Additionally, the web cast will be available for replay until close of business on October 24th, 2003.
Interim Chief Executive Officer
Phone: +41 (0)44 922 88 88
Fax: +41 (0)44 922 88 89
Chief Financial Officer
Phone : +41 (0)44 922 8186
Fax : +41 (0)44 922 8889
e-mail : firstname.lastname@example.org