Tecan misses forecasts in lacklustre 3Q

Switzerland's Tecan's has reported third-quarter results that are a little below analyst consensus forecasts, with a mixed picture across the group. Proteomics/genomics put in a good good performance, but drug discovery sales fell by a quarter.

Revenues for the quarter were SF 74.5 million, a decline of 5.5 per cent in Swiss francs or 2.9 per cent in local currencies. Consensus estimates were that revenues would be SF 80 million. The company reported a net loss of SF1.2 million, also below consensus (SF 1 million).

The proteomics/genomics division saw a growth of 23 per cent to SF 22 million (up 33 per cent in local currencies), while drug discovery experienceda 25 per cent decline in sales to SF 23 million. On the positive side, diagnostics was able to stem the sales haemorrhage that occurred in the first half (a 24 per cent decline), with third quarter revenues coming in at SF 29 million, down 2 per cent.

Tecan is banking on the success of its new Freedom EVO laboratory automation system, introduced earlier this year. While few actual sales were recorded in the third quarter, a number of new orders were received for the new platform in the quarter.

However, the company's new EVOWare software for fluid handling is experencing another delay as Tecan has decided to add more features, pushing launch back to the first quarter of 2004.

A cost-cutting programme started two years ago is gaining traction, according to analysts at Julius Baer. As a result, they said, Tecan's earnings before income tax (EBIT) of SF 10 million before extraordinary charges wasbetter than expected, resulting in a 13 per cent margin.

However, they noted that non-recurring expenses of SF10.9 million were higher than forecast due to the previously announced charges associated with the closure of the firm's Munich R&D facility, as well as an impairment charge of SF 5.7 million on the LabCD microfluidic disk project.

Mike Baronian, Tecan's interim CEO, said that the company remains committed to the LabCD and the slow uptake of sales, so far, is a result of being late in developing the first two assays. The first is already on the market and the second one will be available by the end of the year, he noted.

The system uses compact disks as a vehicle for the microfluidic technology, and Tecan is expecting to sell a number of machine next year that will help drive sales of the CDs, intended as the key revenue stream from the project.

Baronian also noted that Tecan was able to reduce its operating expenses by SF 10.5 million, or 4.6 per cent 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 per cent and 13.4 per cent of sales respectively."​