Covidien Q1 Profit Down, But Adj. Profit Tops View - Quick Facts

(RTTNews) - Healthcare products company Covidien plc. (COV) reported that its first quarter of 2014 net income declined to $398 million or $0.87 per share, from $493 million or $1.03 per share in the same quarter last year.

GAAP earnings per share from continuing operations were $0.87 in the first quarter of 2014, versus $0.96 per share in the comparable quarter last year.

First-quarter 2014 adjusted earnings per share from continuing operations, excluding the specified items, were $1.00, versus $0.97 a year ago. This represented a 3% increase despite unfavorable foreign exchange, the medical device tax and incremental investments in emerging markets. Analysts polled by Thomson Reuters expected the company to report earnings of $0.94 per share for the quarter. Analysts' estimates typically exclude special items.

In the first quarter of 2014, the company reported operating income of $531 million, versus $596 million in the same period the year before. First-quarter 2014 adjusted operating income, excluding the specified items, was $599 million, compared with $604 million in the previous year. Both operating income and adjusted operating income for the current quarter were reduced by approximately $45 million due to the impact of unfavorable foreign exchange and the medical device tax.

Quarterly net sales were $2.64 billion up 3% from the $2.57 billion in the first quarter a year ago. Sixteen analysts had consensus revenue estimate of $2.60 billion for the quarter. Operational sales growth in the quarter was 5%, as foreign exchange rate movement lowered the quarterly sales growth rate by two percentage points.

Covidien has updated its fiscal 2014 tax rate guidance. The company now expects that the effective tax rate for 2014 will be in the 16.5% to 17.5% range, including foreign exchange at current rates and excluding the impact of one-time items.

The company said it did not change any other 2014 guidance, which was previously issued in December 2013.

The company said in December that it revised its revenue guidance for fiscal 2014, stating that foreign exchange, at current rates, was expected to reduce reported revenues by 100 to 125 basis points.

The company continues to estimate that net sales in fiscal 2014 will be up 2 to 5 percent. Analysts expect the company to report revenues of $10.62 billion for fiscal 2014. Sales still are expected to be up 3 to 6 percent for Surgical Solutions and up 3 to 6 percent for Vascular Therapies, while Respiratory & Patient Care is expected to see a 1 to 4 percent rise.

The company continues to expect operating margin, excluding the impact of one-time items, to be in the 21.5 to 22.5 percent range.