Baxter International Inc. (Baxter) has reported net sales of $12.3 billion for the full year 2008, compared with the net sales $11.2 billion in the previous year-end. It has also posted net income of $2 billion, or $3.16 per diluted share, for the full year 2008, compared with the net income of $1.7 billion, or $2.61 per diluted share, in the previous year-end.
Baxter reported fourth quarter net income of $569 million, an increase of 19%from the $478 million reported in the fourth quarter of 2007. Earnings per diluted share of $0.91 increased 23%from the $0.74 per diluted share reported in the prior-year period. These results include an after-tax special charge of about $5 million for in-process research and development related to the acquisition of certain technology applicable to the company’s BioScience business.
On an adjusted basis, excluding special charges in 2008 and 2007, Baxter’s net income in the fourth quarter totaled $574 million, an increase of 18%over the $488 million reported for the same period last year. Adjusted earnings per diluted share of $0.91 increased 20%from the $0.76 reported last year, and exceeded the company’s earnings guidance for the fourth quarter of $0.88 to $0.90 per diluted share. Baxter’s strong financial performance was the result of continued momentum and strong fundamentals across the portfolio, improved margins, and a lower tax rate.
Baxter’s worldwide sales totaled $3.1 billion in the fourth quarter, and increased 4 percent. Excluding the impact of foreign currency, worldwide sales increased 9%and exceeded the company’s guidance of about 7%growth. Sales within the United States increased 6%to $1.4 billion, while international sales grew 3%to $1.8 billion. Excluding the impact of foreign exchange, Baxter’s international sales grew 10 percent.
“Baxter had another very successful year in 2008,” said Robert L. Parkinson, chairman and chief executive officer . “We exceeded expectations on all key financial metrics throughout the year, which illustrates the solid fundamentals underpinning our portfolio and expanded geographic reach. Despite a challenging, global macro-environment, we’re very well-positioned to continue to meet our commitments, leverage the benefits of our diversified healthcare model, and continue with our strategic priority of accelerating investment in research and development.”
Full-Year Results
Baxter also generated strong cash flows in 2008, with cash flow from operations improving by more than $200 million to a record level of $2.5 billion, net of a $240 million contribution to the company’s pension funds in the fourth quarter. In addition, the company repurchased 32 million shares of common stock, for about $2.0 billion, and paid dividends totaling about $550 million.
“We are very pleased with our financial results for 2008, particularly our ongoing ability to generate strong cash flows,” said Robert M. Davis, chief financial officer. “In 2008, we created significant value for shareholders due to the strength of our financial position, ongoing financial flexibility, and continued focus on capital allocation and financial management discipline, while investing at record levels in research and development.”
First Quarter and Full-Year 2009 Outlook
Baxter also announced today its guidance for the first quarter and full-year 2009. For the full year, Baxter expects sales, excluding the impact of foreign exchange, to grow about 7 percent. Adjusting for the unfavorable impact of foreign exchange, Baxter expects reported sales growth to be about flat compared to 2008, based on current exchange rates. The company also expects earnings per diluted share of $3.70 to $3.78, before any special items, and expects to generate cash flow from operations in excess of $2.6 billion.
For the first quarter of 2009, Baxter expects sales growth, excluding the impact of foreign exchange, of about 7 percent. Adjusting for the unfavorable impact of foreign exchange, the company expects reported sales growth to be about flat compared to the first quarter of 2008, based on current exchange rates. The company also expects earnings per diluted share of $0.80 to $0.82, before any special items.
“Our 2009 guidance reflects the ongoing operational strength of our businesses and ability to deliver sustainable growth,” concluded Davis. “It is aligned with our long-range strategic and financial objectives. Although we are operating in a volatile and challenging macro-environment, the potential effects of which continue to evolve, we remain focused on delivering growth while making appropriate investments for the future.”