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news.Sigma-Aldrich Corporation (Sigma-Aldrich) has reported net sales of $2.2 billion for the full year of 2008, up 8%, compared with net sales of $2 billion in the previous year-end. It has also reported a net income of $341.5 million, or $2.65 per diluted share, for the full year of 2008, compared with the net income of $311.1 million, or $2.34 per diluted share, in the previous year-end.
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Reported sales of $510 million in the fourth quarter ended December, 2008 declined by 4% compared to 2007. Excluding the impact of currency, sales in the fourth quarter grew 3% from a year ago. Fourth quarter organic sales for the company’s Research business grew 4%, while the Specialty Fine Chemicals business (SAFC) organic sales were in-line with prior year level.
Operating margin in the fourth quarter 2008 increased by 30 basis points to 22.5% from the same period of 2007, reflecting benefits from process improvements, global supply chain initiatives, cost containment initiatives and recent strategic pricing actions.
For the full year 2008, reported overall sales grew by 5%, with Research and SAFC sales up by 6% and 3%, respectively. Reported diluted EPS for 2008 increased by 13% from 2007 to a record $2.65.
Other 2008 Highlights:
xpanded full year operating margin by 40 basis points to 22.9% through higher sales, operating process improvements and strategic pricing actions.
Reported strong net income and free cash flow of $342 million and $314 million, respectively, for the full year.
Realized currency benefits of $.02 and $.27 in reported, diluted EPS for the fourth quarter and full year, respectively.
Achieved sales to CAPLA (Canada, Asia Pacific, Latin America) markets of 22% of total sales.
Increased fourth quarter sales through the company’s award winning web site by 5%. Web based sales now represent 42% of worldwide Research-based sales in the fourth quarter.
Enhanced the breadth of scientific knowledge with 70 new technology in-licenses in 2008 bringing total in-licenses held to over 600.
Received recognition for CompoZr Zinc Finger Nuclease (ZFN), a breakthrough gene editing technology, as one of the “Top 10 Innovations of 2008” by The Scientist magazine.
2009 guidance on Sales growth and EPS:
While the demand for Sigma-Aldrich’s products continued to be healthy in the fourth quarter of 2008, the current uncertainty in the global markets reduces future visibility, making it difficult to forecast sales with a desirable level of certainty. Demand from several of the company’s key markets is expected to decline in 2009, but with new program launches, global sales initiatives and market share gains, the Company expects to be able to achieve low single digit organic sales growth in 2009. Currency is expected to reduce otherwise reportable growth in 2009 by about 7% if exchange rates remain at current levels.
The negative impact of currency on EPS is expected to be about $0.30 in 2009 if exchange rates remain at current levels. The company plans to offset this impact through growth in organic sales, supply chain optimization, and other operational process improvements, and expects to report 2009 pre-tax margins and an EPS at or slightly above 2008 levels.
Chief executive officer (CEO)’s Statement:
Commenting on 2008 performance and 2009 expectations, president and chief executive officer Jai Nagarkatti said: “Despite a challenging environment, we are pleased with our 2008 performance and our ability to improve our profitability. The initiatives that have been key to growth over the last three years are performing well. Looking forward, we are accelerating activities on a number of these initiatives. We are also elevating our efforts in other areas where significant performance improvements can contribute to enhanced growth in sales and profits. And, finally, we are finding other new and innovative ways to differentiate our Company in both life science and high technology applications by building on our unrivalled scientific knowledge and global logistics capabilities.”
Nagarkatti continued, “We attribute our 2008 performance to our ability to win market share and drive operating performance faster than sales. Our long-term objective is to achieve above-market rate organic sales growth and enhance that through contributions from technology acquisitions and our innovation efforts. In the near term we expect challenging market conditions and plan to respond by maintaining tight control of our costs without sacrificing the commitment to our growth initiatives. We will approach 2009 with the same passion and energy that has driven our success in the past and exit this recession as a much stronger company than ever before.”