Amersham comes in low, but on track
interim sales and profits, but points to currency effects and the
underlying strength of the business
Amersham today trimmed its 2003 profit forecast by £40 million (€57m), or 4.1 pence per share, after reporting lower sales and pre-tax profits for the first half of 2003 compared to a year earlier. In February, the firm said the shortfall would be around £30 million.
Analysts said that the results were largely in line with expectations, and the company's share price put on over 8 per cent to £4.90, as investors who sold the shares in advance of the results bought back their positions.
Sales were £808 million, down fractionally compared to first-half 2002, although Amersham claimed that without adverse currency effects (the firm manufactures in the UK and Scandinavia but makes most of its sales in the USA and Japan) the underlying growth was 6 per cent.
In absolute terms, pre-tax profits fell 12 per cent to £140 million, although Amersham said that this correlated to an increase of 8 per cent once currency effects of £29 million were taken into consideration. If costs associated with shedding staff in its Discovery Systems division and goodwill amortisation were included, pre-tax profits fell 47 per cent to £77 million.
Looking at each of the company's divisions, Amersham Health sales (mostly in vivo diagnostics) rose 8 per cent to £484 million, while turnover at the Discovery Systems unit making laboratory research tools climbed 4 per cent to £192 million, although this excluded £12 million in lost sales of products discontinued as part of the restructuring. For Protein Separations, revenues were up 3 per cent to £133 million, helped by greater than anticipated demand for the recently launched AKTApilot bench-top protein purification system.
The company said the performance was underpinned by strong growth in bioprocess sales and a good performance in North America, although sales in the second quarter were held back by a slowdown in antisense development and a "challenging" environment in Europe. Amersham is also expecting to benefit from the recent approvals of seven biologic drugs, including four monoclonal antibodies, by the US Food and Drug Administration (FDA).This will drive demand for its MabSelect antibody separation technology.
For Discovery Systems, growth in proteomics and bioassays was offset by the continued weakness in the genomics market, according to Amersham. The effects of the restructuring reduced the operating loss in the division to £10 million, including the continued investment in the CodeLink array technologies, which had net expenditure of £7 million in the first half.
" Looking to the future, the strategic focus will be on protein analysis and cellular bioassays which have high growth potential," said the firm, pointing out that a number of new products were launched in these areas the first half of the year, including new DIGE dyes, sample preparation products and software for protein analysis. In the bioassays area, the IN Cell Analyzer 1000, a sub cellular imaging system for cell-based drug profiling, target validation and assay development, was introduced yesterday.
Amersham also provided details of the progress in restructuring Discovery Systems, intended to bring it into profitability in 2004. Savings in the first half reached £7 million and are tipped to be £16 million for the full year, while 210 out of 445 planned job cuts have been achieved.
Commenting on the results, Sir William Castell, Amersham's chief executive, said: "Our business fundamentals remain strong. The outlook for the second half is encouraging, with an expected continuation of steady growth in Amersham Health, a stronger performance in Protein Separations and further benefits coming through from the restructuring of Discovery Systems."