- China emissions also hit Johnson & Johnson’s earnings
- Abbott hopes to regain lost market share for baby formula
Jan 25 (Reuters) – Abbott Laboratories ( ABT.N ) reported lower-than-expected fourth-quarter medical device sales on Wednesday as COVID-19 slows China and supply chain problems hit its international operations.
The company also flagged that sales of medical devices would remain soft in the first quarter, echoing similar comments a day earlier from rival Johnson & Johnson, which cited China’s COVID outbreak as the reason for the weakness.
Abbott’s medical device sales came in at $3.75 billion in the quarter, missing analysts’ average estimate of $3.84 billion.
China had enforced zero COVID restrictions for about three years, but scrapped the policy last month, sparking a massive wave of infections.
Abbott shares fell 2.2% in U.S. trading on Wednesday. The company’s overall profit was better than expected, supported by strong demand for its diagnostics business and glucose monitoring device FreeStyle Libre.
Freestyle Libre has driven sales of Abbott’s medical devices, offsetting a decline in sales of COVID-19 diagnostic tests as infections subside.
The company recorded $1.1 billion each in FreeStyle Libre and COVID test-related sales. It expects test-related sales of about $2 billion this year.
However, the company reported an 11% drop in overall nutrition sales for the quarter, with U.S. pediatric nutrition revenue falling by about a fifth due to disruptions at its baby nutrition plant in Michigan in the first half of 2022.
The facility reopened after the regulator and the company reached an agreement in May. The factory is now facing a criminal investigation, causing further uncertainty after foreign formula makers grabbed market share from Abbott.
Chief Executive Robert Ford told an investor conference that Abbott expects to regain its market share by 2023. Before the shutdown, Abbott controlled 40% of the infant formula market, including Similac, but the factory closures led to other players including Reckitt Benckiser Group PLC ( RKT.L ) , to remove its dominance.
Production has since increased, and Abbott has begun reclaiming the share for formula, Ford said.
Abbott’s adjusted quarterly earnings of $1.03 per share share beat the Refinitiv IBES estimate of 92 cents.
The company also forecast adjusted earnings of $4.30 to $4.50 per share for 2023, with the midpoint marginally lower than analysts’ average estimate of $4.41.
Reporting by Leroy Leo and Pratik Jain in Bengaluru; Editing by Sherry Jacob-Phillips and Maju Samuel
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