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Abbott reports flat Q2 net profit

Abbott Laboratories has reported an unchanged net profit for the second quarter of 2010, despite a 17.8 per cent increase in sales

Abbott Laboratories has reported an unchanged net profit for the second quarter of 2010. The company made $1.29bn in the period – an increase of just 0.3 per cent from the figure in 2009.

The relatively small growth is despite an increase in sales for the company of 17.8 per cent, with total global revenue coming to $8.83bn. This was compared to sales of $7.46bn for Q2 2009.

Operating costs and expenses came to $7.22bn however – a rise of 24 per cent from the operating costs in 2009 for the period – negating much of the increase in revenue. Acquisitions contributed to much of this increase, including the purchase of the generic drug unit of Indian company Piramal Healthcare for an upfront payment of $2.12bn in May, 2010.

It was only a favourable tax rate that caused the percentage change in net profit to remain positive, with Abbott's earnings before taxes for Q2 2010 amounting to $1.56bn compared to $1.57bn for the previous year.

Excluding specified items however, such as $22m for cost reduction initiatives and $106m for a litigation reserve, net profits had a healthier increase of 13.6 per cent, totalling $1.58bn. Minus these excluded items, earnings-per-share (EPS) also had strong growth, increasing by 13.5 per cent from $0.89 to $1.01.

"Abbott's diverse sources of earnings growth led to strong financial results again this quarter, continuing Abbott's record of steady, reliable performance," said Miles D White, chairman and CEO, Abbott.

The company performed particularly well in pharmaceutical sales, with revenue up 24.5 per cent to $4.91bn. Strong-selling products included TNF inhibitor Humira (adalimumab) for diseases involving inflammation, which made $1.59bn for the quarter – a reported increase of 21.5 per cent. Cholesterol treatment, TriCor/Trilipix (fenofibrate) also saw improved growth, with sales increasing 15.6 per cent to £388m.

Abbott confirmed previous guidance that EPS for the whole of 2010 will have growth of around 12 per cent from 2009, excluding the previously specified items. This will see EPS increase to between $4.13 and $4.18.

22nd July 2010

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