The world’s 4th-largest medical device company posted flat sales and a profit slide as the economic crisis in southern Europe and the strong dollar took a toll on GE Healthcare (NYSE:GE).
GE Healthcare logged profits of $694 million on sales of $4.50 billion during the 3 months ended June 30, down 2.4% and up less than half a percent, respectively, compared with the same period last year.
CFO Keith Sherin told analysts on a conference call that lower prices and "execution challenges" in Latin America drove the profit slide.
"Excluding those, we would have had healthcare up about 2% in the quarter," Sherin said during the call.
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Orders for the healthcare segment rose 1% to $4.7 billion, Sherin said, but rose 4% excluding the effects of foreign exchange rates.
"If you just go around the regions on equipment orders, the U.S. was flat, China was up 26%, Latin America was up 9%, Middle East was up 13%, India was down 8% but up 9% ex-FX. Europe was the soft point, down 13%, driven by Southern Europe," Sherin said.
GE CEO Jeffrey Immelt said the execution issues south of the border were likely a 1-time thing.
"I see healthcare going positive in Q3 as well," Immelt said during the call. "So I think we see a U.S. healthcare market that’s kind of flat, maybe up a couple of points. As Keith said, Europe is very tough. But the emerging markets in healthcare are pretty dynamic. And I think at EPG we said healthcare is the 1+ to 2+, so up single to double. We still think healthcare is going to have a good, solid second half of the year."
Overall, GE reported profits of $3.11 billion, or 34¢ per share, on sales of $25.0 billion for the quarter. That’s a bottom-line plunge of 15.8% on a top-line gain of 9.1%. Wall Street analysts were expecting adjusted earnings per share of 37¢, a penny below the 38¢ adjusted EPS GE posted.
