Wednesday, drug and medical device maker Abbott Laboratories (ABT) reported a marginal increase in third-quarter profit as one-time charges offset a 4.2% increase in revenue. The company also provided earnings guidance for full year 2010.
Despite the revenue growth in all segments, ABT is flagging in Wednesday's morning session, reflecting investors' worries about declining sales of Abbott's arthritis drug Humira and generic competition for its epilepsy drug Depakote. During the fourth quarter, sales of Humira in the U.S. increased only by 3.1% from the year-ago quarter whereas the drug had 21.3% growth in the preceding third quarter when compared to the similar quarter of 2008. Sales of Depakote nosedived during the quarter, and the company estimates a 69.5% drop in sales due to generic competition.
The Abbott Park, Illinois-based company's fourth-quarter net earnings edged up 0.2% to $1.539 billion from $1.536 billion a year ago. Earnings per share remained flat at $0.98 for both the quarters.
Excluding items, fourth-quarter net earnings from continuing operations rose 11.5% to $1.85 billion from $1.66 billion in the comparable quarter of 2008. Earnings per share from continuing operations, excluding items, climbed 11.3% to $1.18 from $1.06 in the prior-year quarter. On average, 15 analysts polled by Thomson Reuters estimated earnings of $1.17 per share for the quarter. Analysts estimates typically exclude special items.
Non-GAAP earnings of 2009 exclude after-tax charges of $170 million, or $0.11 per share, for acquired in-process research and development associated with PanGenetics acquisition, $99 million, or $0.07 per share, primarily for acquisition integration and cost reduction initiatives, and $37 million, or $0.02 per share, related to inventory write-offs associated with the suspension of sibutramine in certain countries following the European regulatory recommendation.
Non-GAAP earnings of 2008 excludes after-tax charges of $183 million, or $0.12 per share, for litigation settlements related to TriCor and $82 million, or $0.05 per share, for cost reduction initiatives, acquisition integration and other expenses. These charges were partially offset by an after-tax gain of $146 million, or $0.09 per share, related to the sale of the spine business, Abbott noted.
Earnings from continuing operations for the quarter increased 17.7% to $5.75 billion from $4.88 billion in the corresponding quarter of 2008. Operating earnings for the fourth quarter jumped by 9.5% to $6.24 billion from $5.69 billion.
Revenues for the fourth quarter increased 10.6% to $8.79 billion from $7.95 billion in the fourth quarter of 2008. Fourth-quarter revenues of 2009 benefited from a favorable 2.4% effect of exchange rates. Excluding the decline in Depakote sales due to generic competition, worldwide reported sales increased 12.7%. Analysts expected revenues of $8.60 billion for the quarter.
In the recent third quarter, Abbott reported net earnings of $1.48 billion, or $0.95 per share, up from $1.09 billion, or $0.69 per share, in the prior-year quarter. Net sales for the third quarter increased 3.5% to $7.76 billion from $7.50 billion in the same quarter last year.
Abbott's worldwide pharmaceutical sales increased 2.7% to $4.85 billion during the fourth quarter. The company had a favorable 2.5% effect of exchange rates during the quarter. Excluding the expected impact of generic competition for Depakote, Abbott's worldwide pharmaceutical sales, including exchange rate impact, increased 8.9%. International pharmaceutical sales increased 22.1%, including a favorable 5.6% effect of exchange rates.
For the quarter, worldwide medical products sales increased by 23.4%, whereas worldwide nutritional sales rose by 8.8%. Medical product sales had a favorable 3.2% effect of exchange rates while nutritional sales had a favorable 0.9% effect of exchange rates. Worldwide diagnostics sales increased 8.8% to $975 million, including the favorable exchange rate effect of 3.9%. Worldwide vascular sales rose 9.1% to $723 million, with favorable exchange rate impact of 2.6%.
International diagnostics sales increased 9.4% to $727 million, gaining on favorable exchange rate of 5.3%. International vascular sales jumped 15.7% to $309 million, with exchange rate impacting favorable by 6.4%.
Total U.S. sales for the quarter was $4.03 billion, with pharmaceuticals contributing to 8.6% of sales, nutritionals at 6.6% of sales, diagnostics at 7.1% of sales, and vascular sales at 4.6%.
Product wise, U.S. sales of Humira increased 3.1% to $774 million from the year-earlier quarter while Kaletra's sales dropped 9.9% to $137 million. Sales of TriCor/TRIPLIX declined 8% to $419 million whereas Niaspan sales rose 14.9% to $254 million. Lupron sales were down 3.6%, at $141 million during the quarter. Synthroid gained 2.2% and had sales of $123 million. Sales of Depakote was at $75 million, with expected decline due to generic competition at 69.5% over the prior-year quarter.
Among Abbott's nutritional products, sales of pediatric nutritionals in the U.S. increased 7.7% to $359 million and sales of adult nutritionals rose 9.5% to $324 million. In the medical products segment, core laboratory diagnostics, coronary stents, and diabetes care products showed weak sales in the U.S. during the fourth quarter. Sales of core laboratory diagnostics eased by 0.5% to $159 million while sales of coronary stents declined 2.3% to $261 million. Diabetes care products suffered the most decline, with sales falling 12.6% to $126 million. Medical optics had sales of $96 million during the quarter while sales of molecular diagnostics soared 43.3% to $42 million.
For full year 2009, the company's net earnings increased 17.7% to $5.75 billion from $4.88 billion in the similar period of 2008. Earnings per common share climbed 18.3% to $3.69 from $3.12 last year. Revenue for the period increased 4.2% to $30.77 billion from $29.53 billion in the year-earlier period.
Looking forward to full year 2010, Abbott estimates earnings per share, excluding specified items, in the range of $4.20 to $4.25. The midpoint of the guidance range reflects growth of 13.5% over 2009, including an expected closure of the Solvay Pharmaceuticals acquisition in February 2010, the company said. For full year 2010, the consensus estimate of 11 analysts is for earnings of $4.17 per share on revenues of $33.12 billion.
For full year 2010, Abbott forecasts specified items of $0.28 per share, primarily associated with previously announced acquisitions and cost reduction initiatives, as well as the one-time impact of the devaluation of the Venezuelan Bolivar. Including these items, the company expects GAAP earnings per share in the range of $3.92 to $3.97 for full year 2010. The company's GAAP forecast excludes integration costs associated with the Solvay Pharmaceuticals acquisition, which will be quantified at a later date, Abbott noted.
Miles White, chief executive officer of Abbott, said, "Abbott's 2009 results demonstrated the sustainable strength and balance of our broad-based businesses. We took decisive long-term strategic actions in 2009 to ensure our strong results continue for years to come. As a result, we're positioned to deliver another year of top-tier performance in 2010."
Abbott declared a quarterly dividend of $0.40 per share, up 11% over the prior period, payable on February 15, 2010, to shareholders of record at the close of business on January15, 2010.
ABT is currently losing $0.98 or 1.80%, and is trading at $53.51 on a volume of 6.05 million shares on the New York Stock Exchange.
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