Covidien Had A Good Quarter

In short

A solid quarter for Covidien plc with favourable year-on-year quarterly comparisons pretty much across the board. Sales were up 5% while product mix and manufacturing cost reduction saw margins climb too. Selling and admin costs increased as the company continued to invest in its emerging markets presence and R&D costs climbed as a sign of strong belief in the future.


Covidien plc has reported results for the second quarter of its financial year (January-March 2012), in a release which can be found here.

Covidien is a multi business operation, so it’s appropriate for us to highlight the Medical Devices picture.

Sales of $2.00 billion in the second quarter were 7% higher than the $1.88 billion in the comparable quarter of last year. Growth was driven by new products and increased volume. Here’s an overview of the sales picture by business area:

  • Endomechanical sales rose from those of the prior year, fuelled by good growth for stapling products that was led by Tri-Stapleā„¢Ā reloads.
  • In Soft Tissue Repair, sales were slightly above those of a year ago, as an increase for sutures was partially offset by a decline for mechanical fixation and biosurgery products.
  • Energy registered another double-digit quarterly sales gain, primarily due to the continued excellent performance of vessel sealing products.
  • Sales in Oximetry & Monitoring were higher than a year ago, spurred by a strong double-digit advance for monitors.
  • Airway & Ventilation sales were even with those of last year, as an increase in airway products countered lower sales of ventilators.
  • Vascular products posted another strong quarterly sales showing, led by outstanding gains for neurovascular, peripheral vascular and venous insufficiency products.

Company comments

“Our second-quarter performance was paced by good top-line growth, improvements in gross and operating margin and a double-digit increase in earnings per share,” said Jose E. Almeida, Chairman, President and CEO. “Once again, our largest business segment, Medical Devices, drove our strong performance, with broad-based growth that was led by double-digit advances in Energy and Vascular products.

“While economic conditions in Europe remain challenging and will continue to require close monitoring, our European sales growth accelerated for the second quarter in a row,” Mr. Almeida said. “The second-quarter operational gain of 6% was the fastest growth we have seen in Europe in more than two years. In addition, during the quarter, we continued to significantly increase R&D spending and to make growth-driving investments in emerging markets, where sales again climbed rapidly. Looking forward, we remain comfortable with our previous guidance for the year.”

Source: Covidien PLC, Business Wire