Danaher cuts outlook on strong dollar, restructuring
NEW YORK (Reuters) - Industrial and medical conglomerate Danaher Corp (DHR.N) reported lower quarterly earnings, cut its full-year forecast and said it would speed up cost-cutting to protect profit margins in a worsening economic environment.
The company said on Thursday that it would spend $100 million this year to restructure operations and reduce expenses, double its earlier plans. It also warned that a stronger dollar would trim profits.
Although U.S. markets were strong in the second quarter, the company is "on alert" because it sees "hairline fractures" in its life sciences and test-and-measurement businesses, Chief Executive Larry Culp said. He said the decision to boost spending on restructuring might prove conservative but seems right at the present time.
"We're seeing customers hesitate to write (orders)," Culp said on a conference call. "In other cases, projects are being pushed out a little more than we would have anticipated."
He said an expected rebound in sales in China may not come as soon as had been expected, but other emerging markets remain strong.
Danaher shares were down 1.9 percent in premarket trading.
Second-quarter net income fell to $600.1 million, or 84 cents per share, from $648.8 million, or 94 cents per share, a year earlier, when discontinued operations contributed to profits.
Excluding one-time items, profit was 81 cents a share, in line with analysts' average forecast, according to Thomson Reuters I/B/E/S.
Sales rose 25 percent to $4.6 billion, also in line with forecasts, with acquisitions accounting for the bulk of the growth. Danaher completed its $5.8 billion purchase of U.S. medical diagnostics company Beckman Coulter last year.
The Beckman deal helped double second-quarter sales in Danaher's life sciences and diagnostics segment, which serves hospitals and labs.
Sales of test and measurement, environmental and industrial technology were also higher, while Danaher's dental segment showed lower revenue.
Demand was strongest in North America and emerging markets, while Western Europe was "essentially flat," Danaher said in a regulatory filing.
Washington-based Danaher, which derives about a quarter of its sales and profits from Europe, said it expects a full-year profit of $3.19 to $3.26 a share, down from a previous forecast of $3.25 to $3.35. Analysts' average estimate was $3.30.
The company said it was optimistic about acquisitions and has carried out eight of them since the start of the year, spending almost $1 billion. It said it could spend $5 billion on mergers and acquisitions over the next two years.
(Reporting by Nick Zieminski in New York; Editing by Maureen Bavdek and John Wallace)
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