Abbott profit forecast disappoints, nutrition weakness drags Q4 revenue

By Christy Santhosh and Kamal Choudhury

Jan 22 (Reuters) – Abbott forecast current-quarter profit below estimates after missing Wall Street expectations for quarterly revenue on Thursday, hurt by weakness in its nutrition and diagnostics businesses, sending shares down 7%.

The company’s pediatric business has taken a hit in recent quarters due to competitive pressure from losing a major U.S. government supply contract last year along with increased manufacturing costs for consumer packaged goods.

CEO Robert Ford said higher manufacturing costs led to higher prices, which in turn suppressed demand as consumers become increasingly price sensitive.

“We’ll have a couple quarters here where growth in nutrition is going to be challenged, and then in the second half, we’ll return to positive growth” said Ford.

The pediatric nutrition business has been facing heavy scrutiny worldwide after companies such as Nestle, Danone and Lactalis pulled batches of their infant formula amid fears of contamination with a rare bacterial toxin.

“Abbott is not impacted by the issues plaguing Nestle and Danone, but there is the potential for a negative aura on formula usage for parents to shift away from this, as we’ve seen in the past” said Bernstein analyst Christian Moore.

All four of Abbott’s segment sales were below expectations. Sales in Abbott’s nutritional segment fell 8.9% from a year earlier to $1.94 billion while the diagnostics segment fell 2.5% to $2.46 billion.

“We had about a billion dollars of headwind that we faced last year in our diagnostic business that’s mostly going to be behind us” said Ford.

The medical device maker expects adjusted per-share profit between $1.12 and $1.18 for the first quarter, below analysts’ average estimate of $1.20 according to data compiled by LSEG.

The company’s total revenue for the quarter ended December 31 was $11.46 billion, compared with analysts’ average expectation of $11.80 billion.

On an adjusted basis, Abbott reported fourth-quarter profit per share of $1.50, which was in line with analyst expectations.

(Reporting by Kamal Choudhury and Christy Santhosh in Bengaluru; Editing by Krishna Chandra Eluri)