Covidien 4Q profit surges, but outlook is weak
Covidien Ltd., a medical device maker and a diversified healthcare company with much of its operations in Mansfield, said today that its fiscal 2008 fourth-quarter profit surged on higher sales, a weaker US dollar, and new products, but the company provided a weak outlook for the next year.
While the weaker US dollar helped boost international sales during several prior quarters, the currency has since regained some strength, cutting into the benefit for Covidien and its peers with a sizable overseas market.
For the three months ended Sept. 26, Bermuda-based Covidien earned $409 million, or 81 cents per share, compared with profit of $34 million, or 7 cents per share a year prior. In the prior year, a hefty charge for discontinued operations cut into profit. Covidien was spun off from parent company Tyco International Inc. in July 2007.
Revenue rose 12 percent to $2.57 billion from $2.30 billion.
Excluding one time charges and gains, the company earned 73 cents per share. Analysts surveyed by Thomson Reuters expected profit of 68 cents per share on revenue of $2.54 billion.
Medical device revenue rose 10 percent to $1.7 billion, aided by a boost from a weaker US dollar and higher sales volumes. Sales of imaging solutions products rose 3 percent to $300 million. Meanwhile, medical supplies sales rose 10 percent to $245 million and pharmaceutical product sales rose 37 percent to $296 million.
"Our performance was especially strong in markets outside the US, as we continued to benefit from the incremental investments made over the last few years to augment our sales force and expand geographically," said chairman, president, and chief executive Richard J. Meelia, in a statement.
Still, he said the imaging segment's minor increase in sales was disappointing, and the company has a plan in place to improve its performance.
For the full year, Covidien earned $1.36 billion, or $2.70 per share, compared with a loss of $342 million, or 69 cents per share, in fiscal 2007. Revenue rose 11 percent to $9.91 billion from $8.9 billion.
Looking ahead, the company warned that a strengthening U.S. dollar will likely negatively impact fiscal 2009 results and sales could range from being flat to rising 3 percent. That implies revenue of $9.91 billion to $10.21 billion, while analysts forecast revenue of $10.34 billion. (AP)