Leading healthcare products maker Covidien plc (COV) has revealed its financial forecast for fiscal 2012. In a recent investor meet, the Ireland-based company stated that it envisages net sales for the year to leap 3%-5% year over year (assuming current foreign exchange rates).
This indicates a slowdown from the company’s current expected sales growth of 8%-11% in fiscal 2011. The current Zacks Consensus Estimates for revenues for fiscal 2011 and fiscal 2012 are $11.53 billion and $12.04 billion, respectively.
The company anticipates revenues from Medical Devices, its principal growth engine, to grow 4%-7% year over year in fiscal 2012. That points to a considerable deceleration from the projected growth of 13%-16% for the division in fiscal 2011. Sustained pricing pressure and a still choppy procedure volume environment (given patient deferrals due to high unemployment) are hurting Covidien.
On a positive note, Covidien expects sales from its Pharmaceuticals segment to move up 2%-5% in fiscal 2012, reversing a sluggish trend witnessed in the current fiscal. Revenues from this segment are expected to be flat to down 3% in fiscal 2011. Revenues from the Medical Supplies division are expected to be flat year over year in fiscal 2012.
Adjusted (excluding one-time items) operating margin for fiscal 2012 has been forecast in the band of 22%-23%, mostly in line with the company’s expectation for the current fiscal year. The effective tax rate is expected between 18% and 19% while free cash flow is projected to exceed $1.9 billion in fiscal 2012.
Covidien is a leading global healthcare products company that develops and markets medical solutions. The company’s core medical devices business faces stiff competition from Johnson & Johnson (JNJ), Becton Dickinson (BDX) and C.R. Bard (BCR).
Covidien remains committed to rolling out new products and technologies, focusing on fast-growing emerging markets, and boosting market share in core segments through investments in sales and marketing infrastructure.
Moreover, Covidien is expanding its portfolio through acquisitions and strategic collaborations. The company recently announced a restructuring program for its three business segments, aimed at boosting its cost structure. Covidien also remains committed to delivering incremental returns to investors leveraging a solid free cash flow and strong earnings power.
