BD dives on Q1 profit slide, lowered guidance

Becton, Dickinson & Co.

Shares of Becton, Dickinson & Co. (NYSE:BDX) continued their slide today after closing down yesterday following the release of the medical products giant’s fiscal 1st quarter results.

Investors, reacting to a lower forecast for the rest of the year and to a nearly 17% profit slide, sent shares down to $77.51 last night, a 3.8% decline. Shares were trading at $76.89 as of about 12:50 p.m. today, down 0.8%.

Becton, Dickinson posted profits of $263.0 million, or $1.21 per diluted share, on sales of $1.89 billion during the 3 months ended Dec. 31, 2011. That’s a top-line gain of 2.5% but a bottom-line decline fo 16.8%, compared with Q1 2011.

Excluding a 1-time tax gain of 4 cents per share, adjusted EPS was in line with analysts’ expectations at $1.21 apiece.

“We are pleased with our solid start to fiscal year 2012 given the challenging macroeconomic climate,” president & CEO Vincent Forlenza said in prepared remarks. “Our operating results reflect our increased investments in high-growth areas. We will continue to drive efficiency throughout the Company and we remain committed to delivering value to our customers and shareholders.”

CFO David Elkins told analysts on a conference call that BD now expects full-year sales growth to be flat due to a stronger dollar. The company had predicted sales growth of 1% to 3% for fiscal 2012. Earnings per share are now pegged to run between $5.60 and $5.70 for the full year, down from $5.75 to $5.85.

"While we don’t normally provide guidance for the quarter, I would like to outline our expectations for the 2nd quarter," Elkins said. "In our Medical surgical systems business, we expect growth rates to improve in the 2nd half of the year as we move past pricing comparisons.

"From an EPS perspective, we anticipate earnings per share to be between $1.36 and $1.40, or about flat versus the prior period. Second-quarter EPS growth versus the prior-year period will continue to be unfavorably impacted by tough comparisons in 2011. These tough comparisons include price erosion and increased investments in SG&A, which began in the 2nd half of fiscal year 2011 and will continue through the 2nd quarter of fiscal year 2012," he said. "We expect a step-up in EPS growth during the 2nd half of the year once we move past the difficult comparisons of 2011."

Sales for BD Medical rose by 2.3% during the quarter, driven by a 17.5% gain from its pharmaceuticals business, which added $60.7 million to the top line. Sales for BD’s medical surgical systems segment slid 2.3% to $248.4 million during the quarter; diabetes care sales rose 6.0% to $105.5 million.

Elkins said the company is expecting more from the division during the full year.

"We are raising the lower end of our medical segment guidance and expect revenues to grow between 2% and 3%," he said, noting that BD expects the pricing pressure that eroded that business during the second half of 2011 to ease during the second half of this year. "So we will see improvement in U.S. as that tough comparison goes away. And then overall, we’re seeing very good growth and increased confidence internationally on med/surg business. Those 2 factors combined is why we’re bringing up the bottom end of the range on the medical segment overall."

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