PerkinElmer second quarter profit up, keeps full-year forecast
(Reuters) - PerkinElmer Inc (PKI.N) reported higher-than-expected second quarter profit on Thursday as solid demand for its scientific and environmental products in the United States and emerging markets offset declines in Europe.
Bucking a trend seen with some of its peers that had to pull back on full-year forecasts, PerkinElmer maintained its 2012 outlook for earnings of $2.00 to $2.05 per share, excluding items, and for organic revenue growth in mid-single digit range.
"You've got a little bit of a headwind with the strength of the dollar and despite that, we're still holding our guidance for the year," Chief Executive Robert Friel told Reuters in a telephone interview.
The weak euro versus the dollar decreases profits of goods sold overseas.
"They are more naturally hedged from a currency standpoint than peers and so most of them lowered numbers based on currency and some on a more conservative outlook, but Perkin didn't have to do that," said Macquarie Research analyst Jon Groberg.
Excluding items, the company earned 53 cents per share, topping analysts' average expectations by 4 cents, according to Thomson Reuters I/B/E/S.
The maker of scientific instruments, medical testing equipment and environmental safety monitoring products, posted a net profit from continuing operations of $33.6 million, or 29 cents per share, compared with a profit of $29.1 million, or 26 cents per share, a year ago.
Not unexpectedly given the challenging economic conditions in Europe, sales declined there in the quarter.
"At some point, the business has to match the headlines and clearly in Q2 we started to see that," Friel said of Europe. "We were down mid-single digits in Europe during the quarter and that's our expectation for the remainder of the year."
He said sales in the Americas grew by mid-single digits and that revenue from China was up by more than 20 percent.
"I think we will continue to see decent growth in the Americas, and of course in the emerging markets, which represented about 28 percent of revenue and contributed about half of organic growth," he said, adding that South America, particularly Brazil, continued to be quite strong.
"Those countries are really focused on environmental concerns and improving healthcare, and we can help them there."
Based on strength in the first half of the year, Friel said PerkinElmer would accelerate investments in the second half.
"We want to continue to build out our capability in the emerging markets. We want to take some of the service offerings we have in the U.S. and expand them into other geographic regions," he said.
Friel said he was particularly pleased with the 17 percent adjusted operating profit margin, an improvement of 240 basis points over the year ago quarter.
Revenue rose 9 percent to $521.8 million, shy of Wall Street estimates of $537 million. Organic revenue growth was 5 percent after adjusting for acquisitions and the impact of foreign currency translation, the company said.
"The revenue number was lower than some people expected, but they were still able to beat on earnings pretty handily," Groberg said. "They have a plan in place to expand margins that they seem to be executing on quite well, so the operating margins came in over 100 basis points higher than expected."
The Human Health division saw sales jump 18 percent to $258.4 million, largely due to the recent $600 million acquisition of Caliper Life Sciences.
Environmental Health sales edged about 1 percent higher to $263.4 million.
PerkinElmer shares were unchanged in after hours trading from their New York Stock Exchange close at $24.83.
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