Katherine Owen, strategy and investor relations vice president for the Kalamazoo, Mich.-based orthopedics giant, told investors last week that business in Europe has been "challenging." She said the company derives about 15% of its total sales from the E.U.
"We’re seeing a lot of head-line risk in southern Europe," she said at the Wells Fargo Securities Conference in Boston. "There are hospitals in Portugal and Spain that have put a moratorium on elective procedures because they don’t have the budgets," she said, adding that the company saw similar activities in Italy last year.
However, not all of the continent is gloomy. Owen said hospitals in the United Kingdom are "freeing up waiting lists" and elective procedures are on the rise.
"Net-net, those southern European markets are challenging," she said.
Owen said it wasn’t clear entirely if the company had lost market share in those markets or if the drop-off was related to an overall drop in procedure volume, although she speculated that it was a "combo of both."
Owen’s assessment is not a surprise. Last week Biomet released its preliminary 2nd quarter earnings, which showed a 2% decrease in its European business. The privately-held Biomet is seen by many experts as a bellwether for the broader orthopedic market.
The European Union has been in the grips of a recession for the better part of the last year, particularly in Spain where the unemployment rate is hovering near 25%.
Owen suggested that Stryker would show somewhat similar results to Biomet in its E.U. business when it releases its Q2 earnings on July 18.