Baxter 1Q Net Up 20% On Year-Ago Charge, Margin Gains

   DOW JONES NEWSWIRES 
 

Baxter International Inc. (BAX) posted a 20% jump in first-quarter net income, as sales of therapies used to treat immune-system deficiencies and a year-ago charge helped offset the impact of the stronger dollar and the recession.

The medical-products maker has benefited from a broad product lineup that helps offset spending cutbacks by hospitals and patients but continues to be plagued by problems with its Colleague infusion pumps, though it said in March new woes wouldn't affect financial results.

Net income rose to $518 million, or 83 cents a share, from $432 million, or 67 cents a share, a year earlier. The year-ago period included a 7-cent charge for infusion pump-related problems. The company in January projected earnings of 80 cents to 82 cents.

Net sales dropped 1.8% to $2.82 billion, but rose 6% excluding currency fluctuations. Baxter had projected a 7% boost on that basis.

International sales fell 7%, but rose 7% excluding foreign-exchange impacts. U.S. sales increased 5% - a noteworthy achievement as the recession generally hampers domestic business growth.

Gross margin rose to 52.7% from 48%.

Baxter's therapies target people with life-threatening conditions such as cancer, immune disorders and trauma. Bioscience - Baxter's largest unit - posted a 3% sales rise, helped by double-digit growth across several product categories.

Baxter first pulled its Colleague intravenous fluid pumps in 2005, amid a host of problems and effects linked to some deaths. But it won't recall the pumps despite newly found problems, saying they will be fixed in the field. The devices are on sale internationally but remain off the large U.S. market.

Looking ahead, Baxter raised the low end of its 2009 earnings outlook by 2 cents to $3.72 to $3.78 a share while reiterating its sales view. It also projected second-quarter earnings of 93 cents to 95 cents on sales falling in the low-single digits on a percentage basis. Analysts projected a 95-cent profit and revenue down 2% to $3.13 billion.

Shares closed at $49.25 on Wednesday and didn't trade premarket. The stock has lost nearly 20% of its value in the past two months.

-By Mike Barris, Dow Jones Newswires; 201-938-5658; [e-mail]