Danaher Corp (DHR.N) reported a higher-than-expected quarterly profit on Thursday, helped by higher margins at its dental and test and measurement businesses, and the industrial and medical technology conglomerate raised its full-year profit forecast.
Danaher's key China market, where sales were flat in the quarter, was now showing signs of rebounding as orders outpaced shipments, Chief Executive Larry Culp said.
"As we go through the year, China should get better," Culp said on the company's conference call, adding he expected mid-to-high single digit sales growth in China in the second quarter.
Danaher is among the first multinational industrial companies to comment about the China market this earnings season. In recent years, growth in that market has been one of the bright spots for manufacturers, but many have pointed to a slowdown in recent quarters.
Danaher's net earnings rose to $612.9 million, or 86 cents per share, compared with $429.4 million, or 63 cents per share, a year earlier.
Earnings from continuing operations were 73 cents a share, beating the analysts' average estimate by 2 cents, according to Thomson Reuters I/B/E/S.
Sales rose 31 percent to $4.32 billion, largely reflecting acquisitions. Sales in North America and in emerging markets improved, despite flat China sales, but were lower in Europe.
Washington-based Danaher completed its $5.8 billion purchase of medical diagnostics company Beckman Coulter in June, doubling the size of its life sciences and diagnostics division and pitting it against giants 3M Co (MMM.N) and General Electric Co (GE.N).
But margins in the life sciences business were lower due to deal costs.
This month, Danaher said it would pay $478.9 million before assumed debt for X-Rite XRIT.O, a provider of digital color management technology that competes with Japan's Konica-Minolta (4902.T).
The deal environment is attractive, CEO Culp said, and the company has about $5 billion in acquisitions capacity over the next two years.
Danaher slightly raised its full-year profit forecast even as its second-quarter outlook came in below Wall Street estimates.
The company said it expected full-year earnings of $3.25 to $3.35 a share from continuing operations, compared with analysts' estimates of $3.30.
For the second quarter, Danaher forecast earnings of 76 cents to 81 cents a share, while Wall Street was expecting 82 cents.
Danaher shares were down slightly at $54.50 in premarket trading.
(Reporting By Nick Zieminski in New York; Editing by Lisa Von Ahn)