Abbott Laboratories ABT
Q2 2013 Earnings Call Transcript

Transcript Call Date 07/17/2013

Operator: Good morning, and thank you for standing by. Welcome to Abbott's Second Quarter 2013 Earnings Conference Call. All participants will be able to listen only until the question-and-answer portion of this call. Should you become disconnected throughout this conference call, please dial 1-773-799-3472 and reference the Abbott earnings call.

This call is being recorded by Abbott. With the exception of any participant's questions asked during the question-and-answer session, the entire call including the question-and-answer session is material copyrighted by Abbott. It cannot be recorded or rebroadcast without Abbott's expressed written permission.

I would now like to introduce Mr. Brian Yoor, Vice President, Investor Relations.

Brian Yoor - VP, IR: Good morning, and thank you for joining us. Joining me today on the call will be Miles White, Chairman of the Board and Chief Executive Officer and Tom Freyman, Executive Vice President, Finance and Chief Financial Officer. Miles will provide opening remarks and Tom and I will discuss our performance in more detail. Following our comments, Miles, Tom, and I will take your questions.

Before we get started some statements made today maybe forward-looking for purposes of the Private Securities Litigation Reform Act of 1995, including the expected financial results for 2013. Abbott cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements.

Economic, competitive, governmental, technological and other factors that may affect Abbott's operations are discussed in Item 1A Risk Factors to our Annual Report on Securities and Exchange Commission Form 10-K for the year ended December 31, 2012. Abbott undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments except as required by law.

In today's conference call, as in the past, non-GAAP financial measures will be used to help investors understand Abbott's ongoing business performance. These non-GAAP financial measures are reconciled with the comparable GAAP financial measures in our earnings news release and regulatory filings from today, which will be available on our website at

With that, I will now turn the call over to Miles.

Miles D. White - Chairman and CEO: Thanks Brian. Good morning. This morning, we reported ongoing earnings per share of $0.46, exceeding our previous guidance range and we are confirming our full year 2013 EPS outlook for double-digit growth. Sales increased more than 4% operationally, led by continued strong performance in emerging markets as well as Diagnostics and Nutrition. Abbott continues to deliver on its expectations, despite the recent depreciation of several foreign currencies and a mixed global economy.

Before I comment on our results, let me address at a high level some of these dynamics. Our earnings performance was strong despite a more negative impact from foreign currency than we had forecasted in April. As you know, the yen depreciated further over the last few months and was the primary driver of unfavorable exchange. Several emerging market currencies also weakened late in the second quarter. This resulted in an unfavorable exchange impact on sales of 1.7%, more than our forecast of 1%. The underlying fundamentals are good; however, especially around gross margin improvement and expense management, which all are progressing ahead of schedule. As we look at total Company sales, our results were strong in our growth market and in line with our expectation in developed markets. Sales in developed markets declined about 1% in foreign exchange, which was less of a decline than we saw in the first quarter. Our businesses in these markets are generally more subject to reimbursement and austerity pressures, however in diagnostics one of our most durable growth businesses, sales in developed markets increased 3% before exchange.

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