Covidien has reported a single-digit increase in sales and operating income results for the third quarter of fiscal 2012, which ended June 30.
Third-quarter net sales of $3.01 billion increased 3 percent from the $2.93 billion reported in the third quarter last year. Operational sales growth in the quarter was 6 percent, as foreign exchange rate movement lowered the quarterly sales growth rate by three percentage points, according to the company’s release.
In the third quarter of 2012, Covidien reported operating income of $617 million, versus $615 million in the same period the year before.
Selling, general and administrative expenses for the third quarter of 2012 were higher than those of the comparable quarter of the year before. The Dublin-based Covidien said this was “primarily due” to spending on growth initiatives to expand its sales and marketing presence in emerging markets, partially offset by productivity gains. Research and development expense in the third quarter of 2012 increased 15 percent and represented 5.3 percent of net sales, versus 4.7 percent of sales a year ago.
The company also reported that its third quarter 2012 effective tax rate was 21.5 percent, versus an effective tax rate of 4.7 percent in the third quarter of 2011. However, no explanation was provided for the jump.
“Top-line operational growth was in line with our expectations, and we generated improved gross and operating margins. That said, our results as reported were restrained by the strength of the U.S. dollar against most foreign currencies and by a slowdown in Europe, where economic conditions remain challenging,” said José E. Almeida, chairman, president and CEO, in a statement. “Operational sales growth in the quarter was particularly strong in medical devices, our largest business segment, led by energy and vascular products, both of which climbed at a double-digit pace.”
For the individual business segments, medical device sales of $2.06 billion in the third quarter were 4 percent higher than the $1.99 billion in the comparable quarter of last year. Operational sales growth in the quarter was 8 percent, as foreign exchange rate movement lowered the quarterly sales growth rate by four percentage points, according to the company, which noted that “growth was driven by new products and increased volume.”
Specifically, oximetry and monitoring operational sales were above those of the year before, aided by increased sales of sensors and monitors. Airway & Ventilation sales also were ahead of last year’s showing, chiefly due to a double-digit increase for ventilators. Finally, vascular products posted another strong quarterly sales gain, led by “exceptional growth for neurovascular and a substantial increase for peripheral vascular products,” reported the company.