NEW YORK: Abbott Laboratories Inc reported better-than-expected quarterly earnings on Wednesday, but combined sales of its nutritional products, medical devices and generic medicines were slightly below Wall Street expectations.
The company earned $375 million, or 24 cents a share, in the three months ended March 31. That compared with $544 million, or 34 cents per share, in the year-ago quarter, when Abbott took charges for licensing and acquisitions.
Excluding special charges, Abbott earned 41 cents per share. Analysts, on average, were expecting 36 cents per share, according to Thomson Reuters I/B/E/S.
Wells Fargo analyst Lawrence Biegelsen said operating expenses of $2 billion in the quarter were $100 million below his forecasts, and bolstered results.
Shares were up 0.4 percent at $38.14 in afternoon trading on the New York Stock Exchange, amid a 0.7 percent gain for the ARCA Pharmaceutical Index of large drugmakers.
Abbott, which spun off its patent-protected drugs early last year into a separate publicly traded company called AbbVie Inc , is trying to build momentum after failing for five straight quarters to meet Wall Street sales forecasts.
"The company is still in transition mode," said RBC Capital Markets analyst Glenn Novarro. "But management is very confident that business will accelerate in the remainder of the year, led by nutritionals, where they should be able to recapture market share."
Sales of nutritional products, the company's biggest product line which includes Similac infant formula and Ensure beverages for adults, fell 4 percent to $1.63 billion in the quarter.
RECALL
Abbott said a recall of its 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 $75 million in the first quarter.
Chief Executive Miles White, in a conference call with analysts, said sales of the nutritional products will rebound in the second half of the year, helped by introduction of new products in China and other overseas markets.
Overall company performance should improve in the third and fourth quarters, he said, helped by improving profit margins. "The next half gets better."
Abbott said global company sales fell 2.5 percent to $5.24 billion. Wall Street expected $5.28 billion.
Sales would have grown 0.5 percent if not for the stronger dollar, which lowers the value of sales in markets outside the United States.
Abbott medical devices also struggled in the quarter, with sales falling 1.2 percent to $1.31 billion. Declines for diabetes care products more than offset strong gains for the company's line of medical optics brands.
Although Abbott had spun off its most profitable prescription medicines into AbbVie, it continues to sell a large number of generic medicines that it calls "established pharmaceuticals."
The medicines, sold largely in emerging markets, have struggled in the past year, and sales fell 6.6 percent in the first quarter to $1.15 billion.
"We'd like to see a steadier course for that business," said Edward Jones analyst Jeff Windau. He added the drugs were providing a steady flow of cash for overall company operations, and had potential to deliver sales growth.
The company reaffirmed it continues to expect full-year 2014 earnings from continuing operations, excluding special items, of $2.16 to $2.26 per share.
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