After getting through a difficult 2006, separation technology specialist Whatman has made it through to the end of the year, reporting preliminary annual financial results and looking towards a more prosperous 2007.
The company reported figures for 2006 that failed to hit the previously forecast revenue growth of 6-8 per cent, falling short at 5 per cent. Company chairman Bob Thian's disappointment at the company's missed target was evident in his statement accompanying the preliminary results:
"Whatman operates in growth markets," he said.
"Its brand and its products are market leaders and…the company's ability to service customer needs is second to none. Hence, our inability to achieve the organic top-line growth that these fundamentals should have delivered was frustrating."
The reason for the reduced growth was largely down to a number of customer orders that were expected in November and December but failed to materialise as anticipated, leaving them to be fulfilled in early 2007 and pulling down growth for 2006.
Operating profit for the year jumped 56 per cent to £35.3m (€52m), largely due to the inclusion of £9.1m that had previously been put aside relating to Whatman's subsidiary, Biometra, a manufacturer and distributor of thermocyclers for DNA analysis.
Biometra was the subject of several patent infringement allegations several years ago which prompted the company to enter voluntary liquidation and Whatman to establish a £9m provision against Biometra's assets.
However, having now fully settled the litigation actions, Biometra is now able to sell fully licensed thermocyclers, and Whatman has taken the subsidiary out of liquidation resulting in the one time gain of £9m.
Whatman's revenue weighed in at £120.9m for the year, an increase of 4 per cent on 2005, and pre-tax profits jumped significantly to £34.6m, up from £21.4m the previous year.
The company has been consolidating manufacturing facilities since its acquisition of German firm Schleicher & Schuell in late 2004, and during 2006 Whatman completed the final round of plant consolidations.
However, despite building up stock to protect against disruption caused by plant closures in Canada and Belgium, the company still experienced some interruptions in its supply chain but is confident these issues have now been resolved.
The firm is aiming to expand capacity and plans to invest in all its manufacturing plants with renewed automation equipment and systems. These include automatic assembly lines and "in line" quality control systems. Whatman is also planning an upgrade of the company network with a view to a fully integrated global system to be online in 2008.
The company's Lab Sciences division, which serves the pharmaceutical industry through from drug discovery and manufacturing to quality control tests, experienced growth of 3 per cent, with revenue for the year coming in at £69.4m.
Products that performed particularly well in the division were Whatman's mini-uniprep syringeless filter (a sample preparation device) which achieved growth of 17 per cent, and the GD/X syringe filter for hard to filter samples which grew by 19 per cent.
The company has suffered with leadership issues of late, with several changes at the top over the past couple of years. Now on their third CEO since the end of 2005, Kieran Murphy, former Innovata CEO, is the latest incumbent having taken up the post in early 2007.
With faith in the new leadership, the company foresees and more prosperous 2007 as benefits from the Schleicher & Schuell acquisition continue to be felt and the manufacturing facility consolidation leads to further cost savings.
Although the order book was a little thin at the start of this year compared to 2006, the company reports that order intake over the first 9 weeks of the year has been encouraging and has reversed this shortcoming.
Whatman is aiming for further revenue growth over the course of 2007 but remains cautious, warning that a weaker US dollar will negatively impact sales and earnings for the company.