(Adds CEO comments, details on formula sales, updates shares)
By Ransdell Pierson
July 16 Abbott Laboratories Inc reported
better-than-expected quarterly earnings on Wednesday as demand
for its recently-recalled infant formulas began to recover and
profit margins improved for other business segments.
Sales of nutritional products, the company's biggest product
line which includes Similac infant formula and Ensure beverages
for adults, rose 1.6 percent to $1.73 billion, following
declines in previous quarters.
"The business seems to be stabilizing," said Edward Jones
analyst Jeff Windau. "Customers are getting more comfortable now
with the quality of Abbott's formulas, so we expect better
growth in the second half of the year."
A recall of pediatric milk formula brands in China and
Vietnam last August, due to fears an ingredient provided by an
outside supplier might be contaminated, crimped sales of the
products by $40 million in the second quarter.
But that was less than the $75 million hit seen in the prior
quarter. Abbott said it is quickly recapturing share in the
affected markets, having just introduced several new products
and by opening a new Similac manufacturing plant in China.
"We're recovering as well as we could in that one-year time
frame," Abbott Chief Executive Miles White told analysts on a
conference call. "We're getting back to the track we want to be
Abbott said it earned $466 million, or 30 cents per share,
in the quarter. That compared with $476 million, or 30 cents, in
the year-earlier period, when Abbott took charges for
cost-saving initiatives and other expenses.
Excluding special items, Abbott earned 54 cents per share,
topping Wall Street expectations of 51 cents. The company said
the outperformance was due to improved profit margins for its
diagnostics and vascular products.
Global company sales rose 1.9 percent to $5.55 billion, a
bit above Wall Street estimates of $5.52 billion.
Diagnostics posted the best showing in the quarter, growing
4.8 percent to $1.19 billion, with double digit sales growth in
the United States. Sales of medical devices rose 1.2 percent to
Abbott early last year spun off its branded patent-protected
prescription drugs into a new publicly traded company, Abbvie
Inc, but continued to sell generic medicines.
Abbott generics have suffered declining sales over the past
year and hurt overall company results. But the flat sales in the
second quarter, of $1.22 billion, were a welcome contrast to the
6.6 percent slump seen in the prior quarter.
In a move cheered by investors, Abbott on Monday said it
would sell its generics business in developed markets outside
the United States to Mylan Inc in a deal valued at $5.3
billion. But Abbott will continue to sell its generic brands in
fast-growing emerging markets.
The suburban Chicago-based company raised its full-year
profit forecast to between $2.19 and $2.29 per share, from
$2.16 to $2.26 per share.
Company shares slipped 0.3 percent at $41.04 in morning
trading on the New York Stock Exchange, amid modest declines for
the drug sector.
(Reporting by Ransdell Pierson; Editing by Franklin Paul,
Jeffrey Benkoe and Nick Zieminski)