MTD
#So we use the term [inaudible] that we have found on weights, in field additions have been very project-oriented in the sense that we really drilled down on the different territories of that business line, where we see additional opportunities with good paybacks.
What we do is we monitor actually the progress of these, so we monitor, one has the implementation of this, recruiting, successfully onboarding, building up the pipeline in [inaudible].
We do kind of quarterly dashboard, then when it comes to the financial results, of course it is a little more difficult to isolate.
We have also a dashboard behind that where we look at successfully outgrowing a versatile average where we added resources and there is very nice correlation where we accelerate that growth.
So I really feel good about it.
Definitely I continue to reflect the results we will talk about services.
Services are where we did targeted additions of seeing it for sales of services.
We use for tele sales who dedicate salesmen to service and we get good results there.
Not really.
I think actually overall, the industrial business is not a super end market, but I don't see things get worse at all.
They could very gradually things get better.
And in Europe, overall, I expect the next few quarters will be reasonably good.
The whole Brexit effect, I am not saying it is positive, but it is also not particularly negative.
With one exception, theUK itself.
Put we need to put this in perspective, the UK is about 3% of our total revenue.
UK had already a certain softness before Brexit, I would associate some of the softness with the uncertainty.
Certainly after vote, it went even further, we will expect some further softness in UK.
Hey, I think it's sometimes difficult to point specifically to market share gains.
I think if we look in our lab and particularly within one quarter, <UNK> but if we look at how we're performing in lab and product inspection, I would say those are two categories we would view ourselves doing very well competitively, and very well specifically in Europe.
As a reminder, Europe is the place where we have the largest percentage of direct sales, and so many of our Spinnaker initiatives are often most fruitful there.
A couple of comments, so on an annualized basis, it will add about 1% to sales.
And then we're assuming it is going to close in the next couple of weeks.
It is at 1% on an annualized basis.
If we are off by a week or two, I think that won't make a material difference.
And then the nature of the business would be that the vast majority of it will be inside the lab business.
Regarding Switzerland, no.
Currencies actually didn't move particular that it would make a difference.
The Swiss measures is something we initiated with a multi year plan, and we are progressing very well on that plan.
I am very happy with the progress that we're making.
The currency move that took place is impacting our producing organization in the UK.
As you might know, for the product inspection, we have the metal detection and the X-ray production there.
This is in essence favorable for us, but will not change something to our global manufacturing strategy, or our footprint.
So I don't see that this will impact our strategy in any significant way.
In terms of hedging, no.
So maybe a little bit of clarification in terms of the incremental margin, I think at least the way we calculated it is 31% measured in actual dollars, but it is actually about 34% to 35% in constant currency, so probably close to maybe what you expected.
Then what was included in there was we did have to catch up, I made a reference to a payment in terms of our SG&A increase.
So we did trigger some re-evaluation of where we expected to finish the end of year, vis-a-vis bonus targets.
Maybe the last point would be along the lines of talking about for a while is that we do like the effectiveness to date of the Field Turbo program.
So there's certainly some up-front investment with regard to our Turbo program in the quarter, and you'll see a little bit of that going forward.
In terms of our incremental margins, I continue to think that numbers in mid, high 30s are very realistic, and frankly, absent the judgment and the comp in the current quarter, which won't impact full-year numbers in a material way, we would have been there this quarter.
So if I look at China in total, I think the second quarter was marginally better than the first.
That was largely driven by our lab business and in particular, process analytics in the lab business.
If we look at kind of where we are, we would expect a positive second half of the year, particularly vis-a-vis where our expectations were when we started the year, but probably a little less than what you saw in the most recent quarter.
I thinkwe grew our lab business in China by close to 20% in the second quarter.
And I think we don't expect that kind of growth, a little bit large order driven.
Particularly in the third quarter, we're probably sitting here today we would estimate that maybe the fourth quarter would be better.
It is probably a little too early to predict right now.
Thank you.
Yes, I think at this stage, mid single digit would be a pretty good guess.
Specifically in the second quarter.
We were at 9.5%, 10%.
And about 20% on the labs.
Maybe just to clarify at least for us, we're thinking this is the first comp from a sales reported number, the first weak number that's been pretty consistent.
It was 7% in the first quarter.
6% last year.
It's totally in backlog sales, actually the order entry in the quarter was high single digits.
And we were looking for a return to high single digit or better in the third quarter.
In the details of the why, if you kind of look at what happened in our product mix, you know it is one of the longer lead time products that we have in the portfolio.
And just the mix changed a bit in the quarter, where there were a lot more within that engineer to order, which is even an extra couple of weeks.
So we're very happy with how that business performed in terms of execution, and continue to think that the market dynamics are good in that business cycle.
Let me double check the details.
So maybe in the second half of the year, we think we'll have some growth.
I am double checking to see if there are any large P&L orders or something in the second half of last year, but I don't think so.
So some modest single digit growth.
I will take the first part of the question but let <UNK> start with the second part of your question.
So let me, so this is a case that fits perfectly now with franchise.
From a size perspective, it is really core to us.
IT is opportunities around.
Yes, we definitely go for them.
We have a radar of possible targets.
There are more, such companies.
You can't really time when they become available.
Often there are topics.
There are succession topics and so on.
So we really pursue them, and whenever they materialize, we are more than happy to close them.
We are looking at smaller ones too.
You shouldn't look that as a new strategy we're pursuing that we are instituting.
Yes, we did a couple of technology adjacencies, and this time we had a great opportunity to acquire actually a service business, and if that pops up again, we will do so.
And with regard to it should add a couple of pennies, maybe up to a nickel in a best-case scenario.
And that would include us making some investment in terms of different things on the growth side, for example, in terms of some international distribution of a product.
<UNK>, do you have any other questions.
We did compete, but while in Europe, we are market leader, in US Troemner was the market leader.
We had a relatively small weights and weight calibration business in US.
So it perfectly fits in our franchise.
Troemner has a fantastic brand and competence in the US, that they have built up over decades that always made it difficult for Mettler-Toledo to compete.
As in Europe, we have been the leader.
It was basically for Troemner to establish a presence in Europe.
They used all of the indirect channels, but Ohaus was not a partner of them.
And they have multiple brands that they are also leveraging at this current stage.
And we are going to maintain that.
In addition we want to leverage the Ohaus brand, or the Ohaus franchise to expand in particular in international markets, where Troemner wasn't particularly strong with their lab equipment business.
Correct.
Raised the pure organic number by 50 bips.
I understand the comment.
If you, I think the comment that we've been making now the last couple of quarters, Rick, is that given overcapacity, as well as let's call it credit risk in the Chinese market, that it's worth putting a little bit of a discount on that piece of it.
That would be kind of number one.
And number two would be in the details now, and I am not counting a lot of basis points, but that we see some tougher comps in a couple of different areas.
So if you look at our year-to-date number, we're plus-5% and we're saying by the end of the year, we should finish at 4.5% at the midpoint of the range, and I guess closer to 5% at the high end of the range.
So let's see how China and some of these comps play out.
Biopharma has been a strong market for a while.
I would like to think that there is upside to the numbers, but we'll see as the quarter and the second half plays out.
I would say yes to both what you said.
Yes that generally the lab is doing well, but I would also say yes, that the life science and biopharma is particularly strong in China.
So hey, maybe on the economic stuff, I am not sure if we're a better source than kind of what you guys read.
It is a bit of, a lot of economic data globally.
It is a bit of a mixed picture.
Maybe one interesting insight we might give you is that I know there's been some articles that some of the GDP growth has come from leveraging up further some of this data on enterprises and regional governments.
It was interesting for us to see when we sorted through the details of our numbers, that we saw really good growth of course in the government sector when it came to labs, but we also saw across the board very good growth with multi-nationalism.
And that's an interesting comment in the sense that if you look over the last three years, the percentage of our total sales in China going to multi-nationals has shrunk, but now we see a nice rebound in the first half of the year across product categories, and I think that's this famous comment we talked about of, for a multinational company, they can defer the replacement cycle for a while on our products, but eventually it bounces back.
I think we see that a little bit there.
Probably a little less on the project side, but much more of this return to the normal replacement cycle.
In terms of the order entry, order entry was similarly positive to what we saw on the sales side.
It was a solid number.
It is not that purely the order entry would make us cautious about the second half.
It is just the realities of that is still a market with instability in it.
I think us remaining cautious makes sense, but I actually felt what we shared with you about multi-nationals was one of the more positive readings that we had in our data coming out of China.
Sure.
So in terms of our price increases, our net realized price increases were 230 basis points up in the second quarter, and on a year-to-date basis, they're now up at 2%.
We did go and look just to put that in a little bit of context, some of that was us chasing some of the currency movements that kind of happened in the course of the earlier part of the end of the first quarter, early part of the second quarter.
And so we are trying to do something in terms of mid-year prices.
I would not expect the second half of the year to be worse than 2 at this point in time.
Hey <UNK>, tax rate we expect at 24%.
I realized I forgot to answer that part of your question.
