Baxter 3Q profit rises 12 percent, costs fall
NEW YORK -- Specialty drug and medical device maker Baxter International Inc. said Thursday its profit grew 12 percent in the third quarter despite unfavorable currency exchange rates that held back its sales.
The Deerfield company said sales of drugs, surgical products and medical equipment all improved and sales costs fell, helping its gross margins. Its profit rose to $530 million, or 87 cents per share, from $472 million, or 74 cents per share, a year ago.
Baxter reported $91 million in one-time charges in the third quarter. Those costs came from ending development of a drug delivery system called Solomix, and in retirement expenses connected to the Syndeo PCA syringe pump.
Excluding the items, profit improved to 98 cents per share from 88 cents per share, a penny above Wall Street expectations.
Revenue was roughly unchanged at $3.15 billion, while analysts expected $3.19 billion, according to a poll by Thomson Reuters.
Sales of the company's plasma proteins and antibody products came in below expectations, leading some analysts to question the market for those products.
Company shares fell $1.50, or 3.4 percent, to $55.49 in morning trading.
On a conference call, Baxter management said delayed orders affected sales of those products.
"Growth was impacted by a change in the timing of plasma orders primarily in Eastern Europe and Latin America versus our expectations," said Chief Financial Officer Rob Davis. "We now expect these sales in the fourth quarter."
BioSciences revenue rose 2 percent to $1.4 billion due to greater sales of hemophilia and antibody drug therapies, plasma treatments and biosurgery products. Medication delivery revenue grew 1 percent to $1.2 billion, although kidney product revenue fell 3 percent.
U.S. sales rose 5 percent, and international sales fell 4 percent. In constant currency, international sales grew 7 percent.
The company's cost of sales fell by more than $100 million, to $1.51 billion, partly because of smaller charges.
Baxter raised its profit and revenue outlooks for the year. The company now forecasts a profit of $3.79 to $3.81 per share, compared with a prior forecast of $3.76 to $3.80 per share. It says revenue will be flat to up 1 percent from the $12.35 billion it reported in 2008, suggesting about $12.37 billion in revenue.
Analysts expect $3.80 per share and $12.48 billion.
Foreign currency exchange rates have become more favorable for U.S. companies as the year has gone on, but excluding their effects, Baxter says its 2009 sales will be up 7 to 8 percent.
Baxter said it expects to earn $1.02 to $1.04 per share in the fourth quarter, roughly in line with Wall Street estimates of $1.04 per share. Sales are expected to rise 8 to 10 percent, which implies $3.38 billion to $3.44 billion in revenue. Analysts expect $3.33 billion.
Baxter reported $3.13 billion in revenue in the fourth quarter of 2008. It said sales will be up 6 to 8 percent if the effects of currency exchange rates are excluded.
Last week Baxter said authorities in the European Union approved its swine flu vaccine. The company said Thursday it has already received orders for 80 million doses of the vaccine in Europe, but added it would be premature to estimate sales because of the developing nature of the pandemic.
The company originally studied the vaccine as a two-dose injection, but is now studying whether a single dose will be enough to prompt an immune response to the flu.