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Stephen MacMillan, President and Chief Executive Officer, Stryker said, "The unprecedented global economic slowdown clearly impacted our business, yet our diverse set of businesses still delivered underlying sales growth in this very challenging period as six of our eight key product franchises delivered mid-single to low double-digit constant currency revenue growth."
The Kalamazoo, Michigan-based company's net earnings for first quarter dropped 3.2% to $281.1 million from $290.5 million in the prior-year quarter. On a per-share basis, earnings for the quarter, however, increased 1.4% to $0.71 per share from last year's $0.70 per share, in line with Street estimates.
Seventeen analysts polled by Thomson Reuters expected the company to earn $0.71 per share. Analysts' estimates typically exclude special items.
In the preceding fourth quarter, Stryker recorded a 0.6% growth in net earnings to $278 million or $0.69 per share, on a 3.6% increase in net sales, helped by Orthopaedic Implants and MedSurg Equipment sales.
Net sales for the quarter declined 2.0% to $1.60 billion from $1.63 billion in the year-ago quarter, shy of analysts' consensus estimate of $1.63 billion for the quarter. On a constant currency basis, net sales increased 3.3% from last year.
Segment wise, worldwide sales of Orthopaedic Implants for the quarter were $973 million, an increase of 0.2% from the same quarter last year. MedSurg Equipment had worldwide sales of $628 million, down 5.3% from last year. On a constant currency basis, sales of Orthopaedic Implants increased 6.2% year-over-year, while sales of MedSurg Equipment decreased 1.0% from the previous year. Domestic sales for Stryker rose 0.9%, while International sales declined 7.0% from the prior-year quarter.
Operating income for the quarter dropped a modest 1.2% to $379.2 million from $383.7 million in the same quarter last year.
Gross profit as a percentage of sales for the quarter was 67.8%, compared with 69.4% last year.
In April 2009, the U.S. Internal Revenue Service issued two notices of proposed tax adjustments to the company's previously filed 2003, 2004 and 2005 income tax returns related to income tax positions taken for its cost sharing arrangements with two wholly owned entities operating in Ireland. Stryker believes it followed the applicable tax law and Treasury regulations and said it would vigorously defend these income tax positions.
For 2009, Stryker now expects earnings within a range of $2.90 - $3.10 per share, down from the earlier issued forecast of $3.12 - $3.22 per share, an increase of 2% - 10% over adjusted net earnings per share of $2.83 in fiscal year 2008.
On average, 17 analysts polled by Thomson Reuters currently expect the company to report earnings of $3.07 per share for the full-year. Analysts' estimates typically exclude one-time items.
The company now anticipates net sales to increase between 2% and 5% on a constant currency rate, however, the company anticipates an unfavorable impact on net sales of about 3.5% to 4.5% for the full year of 2009 and approximately 5.5% to 6.0% in the second quarter of 2009, if foreign currency exchange rates hold near current levels.
The company had earlier anticipated a constant currency net sales increase in the range of 6% to 9% and recording an unfavorable impact on net sales of approximately 4.5% to 5.5% in the first quarter of 2009 and an unfavorable impact on net sales of approximately 3.5% to 4.5% for the full year of 2009, if foreign currency exchange rates hold near current levels.
Amongst others in the sector, Warsaw, Indiana-based Zimmer Holdings Inc. (ZMH | Quote | Chart | News | PowerRating), is scheduled to announce its quarterly earnings results on Thursday, April 23, 2009. Sixteen analysts polled by Thomson Reuters Analysts' currently estimate Zimmer to report earnings of $0.94 for the quarter.
SYK closed Monday's regular trading at $37.42, down $0.52 or 1.37% on a volume of 4.0 million shares on the NYSE. In the past 52 weeks, the stock trended in a broad range of $30.82 - $69.00, with a three-month average of 3.40 million shares.
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