PerkinElmer Inc (PKI.N) on Thursday reported lower-than-expected first-quarter profit and decreased its full-year forecast as difficult economic conditions and a stronger dollar hurt sales in Europe and Japan.
Investors used to PerkinElmer beating earnings expectations and incrementally raising forecasts over the course of the year punished the stock, sending it down 13 percent.
Excluding onetime items, such as a tax credit, PerkinElmer earned 36 cents per share. Analysts on average expected 48 cents per share, according to Thomson Reuters I/B/E/S.
"Unfortunately we had a relatively small subset of our businesses that were down fairly significantly," said PerkinElmer Chief Executive Robert Friel in a telephone interview.
PerkinElmer said it now expects 2013 earnings of $2.00 to $2.10 per share, excluding items, down from its prior forecast of $2.24 to $2.32. It sees revenue growth in the low-single digits after earlier projecting mid-single digit growth. Wall Street had been looking for earnings of $2.29 per share.
"We got caught in investing for growth at a time when we hit a little bit of a headwind in our end markets," Friel said.
"As we look to the back half of the year, we do think there's going to be some recovery in those end markets," he said, adding, "We wanted to make sure we put a forecast out there that's achievable."
The maker of scientific instruments, diagnostic equipment and environmental safety monitoring products posted a net profit from continuing operations of $32.3 million, or 28 cents per share, compared with a profit of $22.1 million, or 19 cents per share, a year ago.
Revenue for the quarter fell 1 percent to $505.4 million, missing analysts' estimates of $532.2 million.
The exceptionally weak yen against the dollar has hurt sales of U.S. companies that do business in Japan in the quarter.
The extent of the weakness in Japan, where sales were down more than 20 percent, and among industrial customers in Western Europe caught the company by surprise.
"Japan was down much more than we thought" it would be, Friel admitted.
Business in Western Europe also lagged its expectations.
"We thought (it) would be down low- to mid-single digits and the instrument side was down mid teens, so that was a bit of a surprise for us," Friel said.
In addition, the in-vivo diagnostic imaging business, which accounts for about 4 percent of overall sales, struggled in the quarter due to automatic U.S. budget cuts, known as sequestration, and general global austerity, the CEO noted.
"The three businesses that represent about 15 percent of our revenue was down about 25 percent," Friel said.
The quarter was not without some bright spots, however. Newborn medical screening revenue was up double digits and business in China grew by more than 20 percent.
PerkinElmer shares fell to $30 in extended trading from their New York Stock Exchange close at $34.47.
(Reporting by Bill Berkrot; Editing by Bernard Orr)