Beckman Earnings Show 25% Drop in First Quarter

Suffering from a continued worldwide decline in government subsidized purchases of laboratory instruments for life-science research, Beckman Instruments Inc. on Monday reported a 25% decline in first-quarter earnings.

The Fullerton-based manufacturer of scientific and diagnostic instruments posted earnings of $8 million for the first quarter of 1990, contrasted with earnings of $10.7 million for the same quarter in 1989.

Beckman also reported a 7% decline in sales, which dropped to $185.5 million in the first quarter of 1990 from $199 million in the year-ago quarter.

The fall in Beckman’s first quarter earnings follows a year-to-year earnings slide to $41.9 million in 1989 from $42.5 million the previous year.

Beckman’s earnings slump continues despite the elimination of 140 positions and other cost-saving measures that Beckman imposed on its Bionalytical Group in the last quarter of 1989.

“Beckman, along with other companies that serve publicly funded bio-research, is experiencing tight market conditions,” Louis Rosso, Backman’s chairman and chief executive, said in a statement. “We are taking steps to manage operating expenses and improve the gross profit rate while at the same time continuing product development programs.”

Jay Steffenhagen, Beckman’s investor relations manager, said the first-quarter earnings were depressed in part because of a 22% boost in the company’s expenditures on research and development contrasted with the same period in 1989.

Also, Beckman reported that its sales of medical diagnostic equipment have been harmed by the increased preference of cost-conscious hospitals to lease equipment rather than buy it outright in order to conserve cash.

While Beckman’s diagnostic leasing business is growing, the company says it will take longer for those revenues to be realized.

The company also noted that its sales volume in the first quarter of 1989 was inflated by heavy first shipments of two new clinical chemistry analyzer products.

But Beckman’s current business difficulty is blamed primarily on a policy adopted several years ago by the National Institutes of Health to fund fewer but larger research grants in the United States.

Steffenhagen pointed out that while the NIH budget has actually increased, the number of new research projects has declined.

Meanwhile, he said, a variety of political and policy changes in other countries, including Germany, Japan and the Soviet Union, have reduced spending in those countries on biological research.

Steffenhagen said Beckman anticipates some improvement in bio-analytical instrument sales in the United States in 1991 if Congress adopts President Bush’s budget proposal, which calls for an increase in NIH research grants. He also expects a “modest improvement” in international business in the second half of this year.

BECKMAN INSTRUMENTS’ PERFORMANCE

Here are revenue and net income figures for Beckman Instruments Inc. over the past nine quarters.

Revenues. In millions of dollars. First quarter 1990: $185.5.

Net Income. In millions of dollars. First quarter 1990: $8.0.