Abbott Laboratories (NYSE:ABT) got the blood flowing for its stent business last year, but the pharma side is causing some bloodletting as Abbott revealed plans to lay off about 2 percent of its global workforce.
The 1,900 job cuts to the Chicago-area medical products conglomerate’s pharmaceuticals division are the result of “changes in the healthcare industry, including U.S. Health Care Reform and the challenging regulatory environment,” according to company officials.
The grim news obscured solid top-line results for both the fourth quarter and full year. Abbott reported sales of $9.9 billion for the three months ended Dec. 31, up 6.8 percent fompared with $8.8 billion during Q4 2009. But profits were off about 6 percent, at $1.44 billion (or 92 cents per diluted share), compared with $1.54 billion (98 cents diluted EPS) during the same period in 2009.
For the full year, profits slid nearly 20 percent to $4.6 billion ($2.96 diluted EPS) on $35.17 billion in sales. Profits in 2009 were $5.8 billion ($3.69 diluted EPS) on $30.7 billion in sales.
Sales for Abbott’s stents business were up 18.6 percent to $3.19 billion in 2010, compared with $2.66 billion the prior year. International sales, particularly in Japan and the European Union, paced the growth of Abbott’s 40 percent increase in sales outside the U.S. Domestic stent sales jumped a mere 3.9 percent. Overall coronary stent sales showed strong growth over the year, jumping 19.5 percent to $514 million.
Abbott’s vascular business jumped 13.7 percent to $822 million in Q4 sales, paced by a 37 percent increase in OUS sales.
Abbott officials said they expect earnings-per-share of $4.54 to $4.64 for 2011. Rick Wise, an analyst with New York-based investment bank Leerink Swann, called that forecast low in a note to investors.
“We’re inclined to think ABT’s 2011 EPS guidance could prove conservative, as the company drives potentially even better margins through ongoing cost-savings initiatives within Vascular and Diagnostics as well as the just-announced Pharma restructuring,” Wise wrote.