Photo courtesy of Medtronic, Inc.
Medtronic's headquarters in Fridley
Sales also declined in the cardiac rhythm disease management and spinal products businesses, two of the company’s largest and highest-margin segments.
February 19, 2013
Fridley-based Medtronic, Inc., on Tuesday reported an increase in quarterly profits but saw shares of its stock decline nearly 3 percent due to weak European sales and declines in sales of its heart and spine devices.
For the third quarter that ended January 25, the company’s profits rose 5.6 percent to $988 million, or 97 cents per diluted share. Revenue for the quarter rose 4 percent to $4.03 billion. Analysts polled by Thomson Reuters projected earnings of 91 cents per share on revenue of $4.04 billion.
Company officials told investors during a Tuesday earnings call that sales declined 1 percent in Europe, mainly due to slow January sales in Western Europe.
“While we have been monitoring Western Europe closely over the past year, Q3 was the first quarter where we experienced a meaningful slowdown,” Medtronic CEO Omar Ishrak said during the call.
European markets generate about a quarter of Medtronic’s total revenue. Chief Financial Officer Gary Ellis told Reuters that Tuesday’s stock decline was due to the sales decline in Europe.
“The stock had been running up recently,” Ellis said. “But in January, we saw a significant kind of change in Europe. (Today) was the first time we communicated that to the investment community.”
Ellis reportedly could not point to any policy change in Europe to explain the weak markets there.
The company’s overall international revenue grew 7 percent, and Medtronic executives said during the call that weak European sales were offset by strong sales in Japan and in emerging markets.
Meanwhile, revenues were down within two of the company’s largest businesses. The cardiac rhythm disease management segment, which makes defibrillators and pacemakers, saw sales decline by 1 percent, and sales in the company’s spinal-products business declined 3 percent.
Officials said that despite “pricing pressures,” those two “higher-margin” businesses are expected to improve as the company plans to introduce new products this year.
Medtronic is among Minnesota’s 10-largest public companies based on revenue
, which totaled $16.2 billion for the fiscal year that ended in April. For the quarter that ended October 26, earnings decreased 2.6 percent to $646 million while revenue grew 0.2 percent to $4.1 billion.
Shares of the company’s stock were trading down 2.8 percent early Tuesday afternoon at $45.78.