Abbott Labs Profit Falls, Hurt by Currency -- Update
29 January 2016 - 5:05AM
Dow Jones News
By Joseph Walker and Anne Steele
Abbott Laboratories Inc. on Thursday reported its profit fell
15% in the final quarter of the year, as the stronger dollar
weighed on its results in emerging markets.
Abbott also gave annual guidance sharply below Wall Street
expectations, which had already come down in recent weeks as
analysts anticipated currency exchange challenges. The company
expects earnings between $2.10 to $2.20 a share, compared with
analyst estimates for $2.26 a share, according to Thomson
Reuters.
Abbott shares fell 8.9% in midday trading; the stock is down
18.4% since the start of the year.
The health-care company said its results also suffered from
challenging market conditions in Venezuela, including high
inflation and price controls. The Venezuelan government, which is
grappling with falling prices for its oil exports, earlier this
month declared a 60-day nationwide economic emergency.
Abbott Chief Executive Miles White said on a Thursday conference
call with analysts that the company's performance in international
markets remained strong, citing strong sales growth and demand for
health-care products in many emerging markets including Latin
America and China.
Still, some investors have become skittish about slowing
economic growth in emerging markets like China. Those concerns were
part of the reason for the decline in Abbott shares on Thursday,
Glenn Novarro, an analyst with RBC Capital Markets, said in an
interview.
Mr. White, whose penchant for deal-making has helped drive
Abbott's growth in the past, sounded pessimistic about executing
acquisitions in the near term, especially in emerging markets. He
said that valuations for deal targets continued to be expensive and
that he wasn't sure investors would reward expanding the company's
risk exposure to emerging markets.
"The price that some of these things would be for sale at would
be imprudent," Mr. White said the conference call. "You have to
step up and say we're not going to be in that zone, we're not going
to be that irrational."
Overall, the company posted a profit of $767 million in the
fourth quarter, or 51 cents a share, down from $905 million, or 59
cents a share, a year earlier. Revenue decreased 3.1% to $5.19
billion.
Analysts surveyed by Thomson Reuters forecast per-share earnings
of 61 cents on revenue of $5.23 billion.
Excluding the impact of currency fluctuations, sales in emerging
markets rose 17% for the Illinois-based company. Operational sales
growth in the quarter was led by double-digit growth in India,
China and Russia. Revenue in the U.S., however, declined 5.7%.
World-wide pediatric nutrition revenue fell 1.3%, hurt by a 5%
currency impact. In the U.S., sales growth was led by continued
uptake of several recently launched non-GMO products.
World-wide adult nutrition sales rose 1.3%, which included a
6.6% foreign exchange drag. World-wide medical devices and
world-wide diabetes care sales dipped 5.9% and 5.2%,
respectively.
Established pharmaceuticals sales fell 4%, dented 15% by
unfavorable currency exchange.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
January 28, 2016 12:50 ET (17:50 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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