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SigmaAldrich Corp. Reports Operating Results (10-Q)

October 21, 2010 | About:
10qk

10qk

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SigmaAldrich Corp. (SIAL) filed Quarterly Report for the period ended 2010-09-30.

Sigmaaldrich Corp. has a market cap of $7.45 billion; its shares were traded at around $61.41 with a P/E ratio of 19.9 and P/S ratio of 3.5. The dividend yield of Sigmaaldrich Corp. stocks is 1.1%. Sigmaaldrich Corp. had an annual average earning growth of 13.5% over the past 10 years. GuruFocus rated Sigmaaldrich Corp. the business predictability rank of 5-star.SIAL is in the portfolios of Edward Owens of Vanguard Health Care Fund, Murray Stahl of Horizon Asset Management, Chris Davis of Davis Selected Advisers, Jeremy Grantham of GMO LLC, Jim Simons of Renaissance Technologies LLC, Bill Frels of Mairs & Power Inc. , Kenneth Fisher of Fisher Asset Management, LLC, First Pacific Advisors of First Pacific Advisors, LLC, Steven Cohen of SAC Capital Advisors, Dodge & Cox.

Highlight of Business Operations:

Sales were $563 in the third quarter of 2010, up 5.4 percent from the third quarter of 2009. The effect of changes in foreign currency exchange rates decreased sales by $10. Excluding the effects of changes in foreign currency exchange rates, sales increased organically by $39 or 7.3 percent. Factors contributing to the organic growth included volume which added 6.6 percent and pricing which added 0.7 percent.

Sales were $1,689 in the nine months ended September 30, 2010, up 7.2 percent from the prior year. The effect of changes in foreign currency exchange rates increased sales by $18. Excluding the effects of changes in foreign currency exchange rates, sales increased organically by $96 or 6.1 percent. Factors contributing to the organic growth included volume which added 5.6 percent and pricing which added 0.5 percent.

Research Specialties total sales were $207 for the third quarter of 2010 compared to $198 during the same period last year. Organic sales increased by $13 or 6.5 percent. The increase was largely driven by higher demand for our analytical products amounting to $6 of the organic increase and higher demand in our chemistry and biochemistry products increasing by $3 and $2, respectively. Research Specialties total sales were $631 for the nine months ended September 30, 2010 compared to $588 during the same period last year. Excluding the effects of changes in foreign currency exchange rates, sales increased by $35 or 5.9 percent. The increase was largely driven by higher demand for our analytical products amounting to $15 of the organic increase and higher demand in our chemistry and biochemistry products increasing by $11 and $6, respectively.

Research Biotech total sales were $84 for the third quarter of 2010 compared to $83 during the same period last year. Organic sales increased by $2 or 2.4 percent. This increase was largely driven by higher demand for our biomolecule products amounting to $2 of the organic increase. Research Biotech total sales were $258 for the nine months ended September 30, 2010 compared to $245 during the same period last year. Excluding the effects of changes in foreign currency exchange rates, sales increased by $9 or 3.7 percent. This increase was largely driven by higher demand for our biomolecule products amounting to $5 of the organic increase and higher demand in the transgenics product group contributing $2. All geographic regions experienced improved demand over the prior year.

SAFC total sales were $167 for the third quarter of 2010 compared to $149 during the same period last year. Excluding the effects of changes in foreign currency exchange rates, sales increased by $21 or 14.1 percent. The primary drivers for this increase were increased demand for our hitech, supply solutions and biopharmaceutical products. Hitech improved by $9, supply solution products added $7 and biopharmaceutical products added $6 as compared to the third quarter of 2009. SAFC total sales were $476 for the nine months ended September 30, 2010 compared to $425 during the same period last year. Excluding the effects of changes in foreign currency exchange rates sales increased by $49 or 11.5 percent. The primary drivers for this sales expansion were increased demand for our hitech, supply solutions and biopharmaceutical products. This increase was largely driven by our hitech products amounting to $23 of the organic increase as the markets for metal organics associated with the semiconductor and LED lighting industries continue to grow. Supply solutions products added $14 and biopharmaceutical products added $13 as compared to the nine months ended September 30, 2009.

Cost of sales primarily represents materials, labor, distribution and overhead costs associated with the Companys products, services and facilities. Cost of sales for the three and nine months ended September 30, 2010 were $265 and $794 compared to $269 and $772 for the same periods in the prior year, respectively, and represented a decrease of 1.5 percent and an increase of 2.8 percent for the three and nine months ended September 30, 2010, respectively. For the three months ended September 30, 2010, when compared to the same period last year, changes in foreign currency exchange rates lowered cost of sales, but these decreases were partially offset by increases in higher manufacturing and distribution expenses resulting from higher sales volumes. For the nine months ended September 30, 2010, the increase in cost of sales was due primarily to higher manufacturing and distribution expenses resulting from higher sales volumes, partially offset by changes in foreign currency exchange rates. Total cost of sales were 47.1 percent of sales for the three months ended September 30, 2010 compared to 50.4 percent for the same three months of the prior year, producing a gross profit as a percentage of sales (Gross Margin) of 52.9 percent and 49.6 percent, respectively. Total cost of sales were 47.0 percent of sales for the nine months ended September 30, 2010 compared to 49.0 percent for the first nine months of the prior year, producing a Gross Margin of 53.0 percent and 51.0 percent, respectively. The following table reflects the significant contributing factors to the net change in gross profit margin for the three and nine months ended September 30, 2010 compared to the same period in 2009:

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