Tuesday, November 18, 2008

Covidien sees sales, profits jump in its Q4

By Mass High Tech Staff

Medical device and pharmaceuticals maker Covidien Ltd. saw a 12 percent spike in sales for the fourth quarter, belying the gloomy economy and ending the year with annual sales growth. Also, the company said its profit soared to $409 million for the final 2008 fiscal quarter, up from $34 million for the same period last year.

On Monday, the Mansfield-based company reported that during the fourth quarter it had seen double-digit increases in revenue from the sales of its medical devices, pharmaceuticals and medical supplies. Sales were up at $2.6 billion from $2.3 billion in the same quarter the prior year, the company stated. It attributed this both to higher manufacturing volume and new products.

Moreover, international regions, including Europe, Asia-Pacific and the Americas excluding North America also delivered double-digit sales gains. The fourth-quarter gross margin was 54.6 percent, up 2.8 percentage points from the same quarter last year. This “significant improvement” was enabled by favorable foreign exchange rates and Covidien’s product mix, which included new brands in its Dosage pharmaceutical line, the company stated.

Sales and administrative expenses rose in the fourth quarter 2008. This was caused by growth in selling and marketing investments, foreign exchange and increased administrative costs. Research and development expenses in the quarter rose 41 percent over the prior year, as well.

For fiscal 2008, net sales of $9.9 billion were 11 percent over the previous year’s $8.9 billion. In fact, the company ended fiscal 2008 with its strongest quarterly operational results since going public in 2007, stated Covidien CEO and chairman Richard Meelia. He noted, however, the imaging segment had posted poor fourth-quarter results, and there are plans to improve it in the future.

For 2009, Meelia said management was comfortable Covidien will make its stated growth targets. However, he expected the strong dollar to have a negative impact on the company’s medical devices and imaging solutions businesses. Covidien estimated sales will either be flat in 2009 or rise no more than 3 percent.

Covidien has over 41,000 employees in 59 countries.