Negative Foreign Exchange Hurts Abbott Laboratories' Bottom Line

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Researched by Industrial Info Resources (Sugar Land, Texas)--Pharmaceutical and healthcare company Abbott Laboratories (NYSE:ABT) (Abbott Park, Illinois) recently reported earnings for the second quarter of the 2009 fiscal year. Net earnings for the company were down 2.6% from 2Q08, moving from $1.32 billion last year to $1.29 billion this year. While operational sales of the company's products were up 10.5% worldwide, a massive 8% loss caused by unfavorable foreign currency exchange pushed actual, reported sales to only 2.5% over the corresponding period last year. "This is the largest negative impact on exchange we have experienced in a single quarter in many years," said Chief Financial Officer Thomas Freyman in a conference call regarding the earnings.

The company's large Pharmaceutical division saw a 5.6% decline in U.S. sales. This drop was largely attributable to one of Abbott's flagship drugs, Depakote, used for the treatment of bipolar disorder and epilepsy, being released in a generic form. This resulted in an estimated $306 million loss of sales for Abbot, causing a decline of 15 percentage points in total U.S. pharmaceutical sales for the company.

On the brighter side of the pharmaceutical spectrum, worldwide sales of Abbott's HUMIRA, approved to treat rheumatoid arthritis, psoriatic arthritis, Crohn's disease and other conditions, were $1.31 billion dollars for the quarter. This represents an increase of 21% in U.S. sales. While international sales were operationally up 44% for the drug, negative foreign exchange knocked this growth to a still respectable 20% increase over 2Q08.

Industrial Info, as part of the Pharmaceutical and Biotech Tracker Online Database, is currently tracking $176 million of Abbott projects, most of which are maintenance shutdowns and programs occurring in the remainder of this year and into next year at various facilities throughout the U.S. One of the larger maintenance programs is getting under way this month at Abbott's OTC Pharmaceuticals plant in North Chicago, Illinois. The estimated $4 million program involves two 1-week shutdowns, one occurring this month and the other in December, in order to perform routine inspection and repairs. In terms of capital expenditure, the company has plans to spend an estimated $150 million on Phase I construction of a grassroot life science campus in Wisconsin. Construction of the project is scheduled to kick off early in the third quarter of next year and will take approximately two years to complete.

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