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Abbott Revenue Misses; Hurt by Dollar, Weak Formula Sales

Wednesday, 22 Jan 2014 11:21 AM

Abbott Laboratories Inc. reported weaker-than-expected fourth-quarter revenue, hurt by disappointing sales of its generic medicines and the lingering impact of an overseas recall of its baby formulas last summer.

The company's shares fell 2.9 percent to $37.99 in early trading.

Abbott, which spun off its branded prescription drugs business early last year into a separate publicly traded company called AbbVie Inc., on Wednesday reported fourth-quarter earnings from continuing operations of $589 million, or 37 cents per share. That compared with a loss of $522 million, or 33 cents per share, a year earlier, when Abbott took a number of large charges, including to extinguish debt.

Excluding special items, Abbott earned 58 cents per share, matching the average analyst's forecast, according to Thomson Reuters I/B/E/S.

Global sales rose 0.4 percent to $5.66 billion, below Wall Street expectations of $5.72 billion. Sales would have risen 3.3 percent if not for the stronger dollar, which lowers the value of sales in overseas markets.

When Abbott spun off its branded prescription drugs last year, it kept its wide array of generic medicines, those no longer having patent protection, and calls them "established pharmaceuticals."

Weak sales of the products, which are sold overseas, have dogged Abbott in previous quarters, and disappointed again in the fourth quarter. They fell 4.3 percent to $1.29 billion, after falling 2.9 percent in the prior quarter. The fourth-quarter decline was attributed to the combination of a weak dollar and especially weak sales in Japan and the developed markets of Western Europe.

Glenn Novarro, an analyst with RBC Capital Markets, said anemic sales of generic drugs was the main reason overall company sales fell short in the quarter.

"We suspect that pharmaceutical (weakness) will take longer to turn around," Novarro said, adding that it was a major concern among investors.

Abbott said it expects earnings this year, excluding special items, of $2.16 to $2.26 per share. That guidance is in line with Wall Street expectations of $2.21 per share.

Sales of the company's nutritional products, including Similac infant formula and Ensure beverages for adults, fell 0.8 percent to $1.7 billion in the fourth quarter.

Abbott recalled batches of its milk formula brands in China and Vietnam in August due to fears that protein concentrate, an ingredient provided by an outside supplier, was contaminated.

Although no contamination was ever found, the disruption reduced sales of its nutritional products for infants and children by $90 million in the third quarter, and another $90 million in the fourth quarter, Abbott said.

Abbott said in October that the recall would continue to hurt sales of its nutritional products, its biggest product line, through the first half of 2014.

Sales of Abbott medical devices rose 2 percent in the quarter to $1.43 billion, with strong performance of the unit's medical optics offsetting declining sales of diabetes care products.

© 2017 Thomson/Reuters. All rights reserved.

 
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Abbott Laboratories Inc. reported weaker-than-expected fourth-quarter revenue, hurt by disappointing sales of its generic medicines and the lingering impact of an overseas recall of its baby formulas last summer.
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2014-21-22
Wednesday, 22 Jan 2014 11:21 AM
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