(Reuters) — Abbott (NYSE:ABT) CEO Miles White isn’t worried about the stronger dollar, telling analysts yesterday that his company will better withstand its painful effects than rivals due to its European factories and growing sales of nutritional products, medical diagnostics and medical optics.
"We are just not vulnerable to the euro and a lot of companies are," White told analysts during a conference call.
White said the stronger dollar will crimp company sales by 6% this year, far worse than the 2.5% drag on Abbott sales seen in 2014.
But the potential foreign exchange hit is limited, Abbott said, because many of Abbott’s factories are located in Europe, where they incur costs in euros. Moreover, the European factories ship diagnostics and other medical devices, generic drugs, infant and adult nutritional products and other products around the world, limiting exposure to the dollar.
Abbott, which captures 70% of its revenue from outside the United States, said global sales rose 5.6% in the 4th quarter. But it said sales would have risen 10.2% if not for the stronger dollar, which lowered the value of sales in many other countries whose currencies have weakened versus the dollar.
Abbott has annual sales of more than $20 billion. Half of its sales are in emerging markets, like China and India, while 30% are from the United States and another 20% is from other developed countries, including Europe and Canada.
Rival U.S. healthcare companies Johnson & Johnson (NYSE:JNJ), Pfizer (NYSE:PFE) and Bristol-Myers Squibb (NYSE:BMY) in the past week issued 2015 earnings forecasts below Wall Street expectations, citing the stronger dollar.
But Abbott’s 2015 earnings outlook of $2.10 to $2.20 per share from continuing operations was in line with expectations, and would reflect growth of 8.5% from last year.
While other companies lowered their 2015 forecasts due to currency factors, White said Abbott refused "to reset the bar lower," and might well end up topping its 2015 profit forecast.
"We are entering 2015 with good momentum," White told analysts. "The fundamentals of our business are strong and ongoing trends across our markets remain positive."
The suburban Chicago company, whose profit margins rose by 2 percentage points last year, said they are expected to expand by another percentage point in 2015, on cost cuts and stronger sales of its array of products.
Abbott shares rose 3.3% yesterday to $44.84, outpacing a 0.7% gain for the ARCA Pharmaceutical Index of large U.S. and European drugmakers.