Abbott Laboratories (ABT), the health-care company that plans to spin off its drug business, fell the most in two months after reporting fourth-quarter sales that came in below analyst estimates.
Abbott dropped 1.3 percent to $55.23 at 4:02 p.m. New York. Revenue was $10.4 billion, held down by declines for heart stents and the HIV drug Kaletra, the Abbott Park, Illinois-based company said today in a statement. Sales were less than the $10.6 billion average of 15 analyst estimates compiled by Bloomberg.
Chief Executive Officer Miles White said in October that he would split Abbott into two companies this year, one focused on drugs and the other on medical devices, generic medicines and nutritional drinks. The pharmaceutical side faces emerging competition for its top seller, the autoimmune drug Humira (WKUPHUMI). Revenue also dropped last year for cholesterol pills after studies questioned their effectiveness.
“The sales miss was driven largely by” the dollar’s rise against currencies elsewhere, which reduced the value of revenue outside the U.S., said Rick Wise, a Leerink Swann & Co. analyst in New York, in a note to clients. “Pharma sales missed by almost $100 million, again largely driven by foreign exchange.”
Abbott said the breakup was “on track,” without providing details. The company forecast 2012 profit of $4.95 a share to $5.05 a share, compared with the analysts’ average estimate of $5.03 a share compiled by Bloomberg.
The company also said it would resume a share repurchase program this year.
Abbott has increased 3.7 percent since Oct. 19, the day the company announced its breakup.
Net income rose 12 percent to $1.62 billion, or $1.02 a share, from $1.44 billion, or 92 cents, a year earlier, when Abbott took $584 million in charges for acquisitions and job cuts. Earnings excluding one-time items were $1.45 a share, topping by 1 cent the $1.44 average of 18 analyst estimates compiled by Bloomberg.
The earnings were boosted by an improved tax rate and a better-than-expected profit margin, said Damien Conover, a Morningstar Inc. (MORN) analyst in Chicago. Humira’s 15 percent sales increase in the quarter “should be good” for the stock, showing Abbott can sustain the drug’s momentum, he said in an e- mail.
Abbott also announced about 300 job cuts today in the division that makes heart stents, tiny metal tubes inserted in patients to prop open diseased arteries. The cuts come in advance of the end of an agreement with Natick, Massachusetts- based Boston Scientific Corp. (BSX), said Adelle Infante, an Abbott spokeswoman.
Boston Scientific licenses Abbott’s Xience stent to sell under its Promus label in a deal that ends this year, Infante said. Boston Scientific won U.S. regulatory approval in November to sell its own stent, called Promus Element.
Abbott is eliminating the positions at the Temecula, California, plant where its devices are made, Infante said in a telephone interview. “Several hundred more” jobs will be cut in the division this year, she said, declining to be more specific.
About 200 more will be cut in other businesses, including pharmaceutical manufacturing in Puerto Rico, Infante said. Separately, Abbott will eliminate another 200 jobs, mostly in the Chicago area, as part of a previously announced restructuring in its diagnostics division, she said.
The company took an 18-cent charge in the fourth quarter for those two actions and other initiatives. The cuts are in addition to a restructuring last year that eliminated 1,900 pharmaceutical jobs, Infante said.
In its earnings statement today, Abbott said it employs about 91,000 people.
Abbott CEO White declined to say how the company’s current debt and dividend would be split among the two successors, in comments on a conference call today with analysts. Abbott will issue a regulatory filing with more details in the latter part of the first half of this year, Chief Financial Officer Thomas Freyman said on the call.
The company has said the combined dividend of the two new companies will be equal to Abbott’s current payout.
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