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WuXi PharmaTech Q4 Profit Edges Up, Sees 2013 Earnings Above View

China-based drug-research contractor WuXi PharmaTech (Cayman) Inc. (WX) on Thursday reported a 1 percent increase in profit for the fourth quarter as double-digit revenue growth was offset by higher expenses.

Looking ahead, the company forecasts earnings for the first quarter and fiscal 2013 to be mostly higher than analysts' estimates. The company's shares gained 4 percent in extended trade.

The company noted that lower gains on foreign-exchange forward contracts of $3 million and a 15 percent increase in income tax expense offset higher revenue in the fourth quarter.

Selling and marketing expenses for the fourth quarter surged 56 percent to $4.73 million, while general and administrative expenses increased 5 percent to $17.95 million and research and development expenses increased 13 percent to $2.50 million. The latest quarter's results also include impairment charges for goodwill and intangible assets of $3.42 million.

Laboratory Services net revenues for the quarter increased 19 percent from the year-ago period to $103.77 million, driven by the company's comprehensive and integrated discovery and development services. China-based laboratory services revenues rose 22 percent and U.S.-based laboratory services net revenues increased 7 percent.

Manufacturing Services net revenues grew 4 percent from last year to $21.89 million, reflecting increased demand for clinical-trial materials in the company's research manufacturing business. This more than offset lower demand for advanced intermediates in the company's commercial manufacturing business.

Gross margin declined to 38.8 percent from 39.2 percent in the prior-year period.

WuXi's fourth-quarter net income was $23.82 million or $0.33 per American Depositary Share or ADS, slightly up from $23.48 million or $0.31 per ADS in the previous-year quarter.

Excluding items, adjusted net income for the quarter was $27.51 million or $0.38 per ADS, compared to $26.94 million or $0.36 per ADS in the same period last year. On average, six analysts polled by Thomson Reuters expected the company to report earnings of $0.30 per share for the quarter. Analysts' estimates typically exclude special items.

Net revenues for the quarter grew 16 percent to $125.66 million from $108.54 million in the prior-year period. Analysts had a consensus revenue estimate of $123.71 million.

For fiscal 2012, WuXi's net earnings increased to $86.58 million or $1.19 per ADS from $80.98 million or $1.07 per ADS last year. Adjusted net income was $102.17 million or $1.40 per ADS, compared to $93.41 million or $1.24 per ADS in the prior year.

Net revenues for the year grew 23 percent to $499.91 million from $407.18 million in the previous year.

Analysts expected the company to earn $1.32 per share for the year on revenues of $497.64 million.

Looking ahead to the first quarter, WuXi forecasts earnings of $0.26 to $0.27 per ADS, adjusted earnings of $0.31 to $0.32 per ADS and revenues in a range of $129 million to $131 million. Street expects the company to earn $0.31 per share for the quarter on revenues of $131.8 million.

For fiscal 2013, WuXi forecasts earnings of $1.26 to $1.30 per ADS, adjusted earnings of $1.49 to $1.53 per ADS, and revenues of $565 million to $575 million. Analysts expect earnings of $1.44 per share for the year on revenues of $571.58 million.

WuXi's board of directors has approved a share repurchase plan that has authorized the company to repurchase up to $100 million of its American depositary shares over the next 18-24 months.

WX closed Thursday's regular trading at $17.30, up $0.08 or 0.46 percent on a volume of 149,045 shares. In after-hours, the stock further gained $0.71 or 4.10 percent to $18.01.

by RTT Staff Writer

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