China’s WuXi PharmaTech has raised its guidance for revenues and operating income in 2010 as the Shanghai-based contract research organisation (CRO) released preliminary results showing that net revenues grew by 21% in the second quarter of the year.
WuXi’s full earnings statement is scheduled for 2 August, just days before the company and its prospective owner, Charles River Laboratories (CRL), put the latter’s proposed acquisition of WuXi to vote with their respective shareholders.
CRL has been pushing hard to convince investors of the benefits of the deal, after leading shareholders argued that the price was too high and the claimed synergies insufficient to outweigh the risks of integrating the two businesses.
As WuXi pointed out, its preliminary results met or exceeded all of its second-quarter guidance. Net revenues, for example, were US$81.0 million, up by 20.9% over the second quarter of 2009 and outstripping projected revenues of US$76-78 million. Overall, commented chairman and chief executive officer Dr Ge Li, the performance gave “compelling evidence that WuXi’s business model is working well”.
Net revenues from China-based laboratory services were US$52.6 million, 17.4% higher than in Q2 2009, while revenues from US-based laboratory services improved by 19.2% to US$19.9 million. Manufacturing services generated net revenues of US$8.5 million, a year-on-year increase of 54.5%.
Operating income was US$15.6-16.3 million compared with US$13.6 million in the second quarter of 2009, registering growth of 14-20%. One-off costs of US$2.9 million associated with the pending acquisition cut into net income, which was 9-5% lower at US$13.3-14.0 million.
In light of these results, the previous financial guidance for the whole of 2010 has now been revised so that net revenues are expected to be 19-20% higher year on year at US$320-325 million. The earlier guidance was for total revenues in the US$310-320 million range.
On a non-GAAP (Generally Accepted Accounting Principles) basis, annual growth in operating income is projected at 10-15% against 0-10% previously.
