Abbott Labs cuts 2,000 jobs despite healthy Q3 earnings

OCT. 9–NORTH CHICAGO, IL– Abbott Laboratories Inc. announced today that it plans to cut 2,000 jobs, or 3 percent of its worldwide work force, despite a reported 14 percent profit increase for the third quarter due to strong pharmaceutical sales.

Abbott, which paid a $100 million fine and remains locked in a consent decree with the U.S. Food and Drug Administration to clean up quality control practices, says it was restructuring its manufacturing, international and diagnostics divisions to improve efficiency and eliminate excess capacity. It expects the plan to yield after-tax annual savings of $80 million to $100 million upon full implementation.

The Abbott Park, IL-based company employs 70,000 people around the world. Details on where the cuts would be made were not immediately available.

In midday trading on the New York Stock Exchange, Abbott shares rose 2.5 percent, or $1 a share, to $40.47.

Abbott also plans to invest $450 million over several years to build new facilities to produce future products.

Net earnings were $720 million, or 46 cents per share, for the three months ended Sept. 30, up from $631.4 million, or 40 cents per share, in the same period a year ago. Excluding charges, earnings were 48 cents a share, matching the consensus estimate of analysts surveyed by Thomson First Call.

Sales increased 3.8 percent to $4.34 billion from $4.18 billion a year ago.

Abbott reported a 1.6 percent increase in U.S. pharmaceutical sales and 4.9 percent increase in international sales. U.S. hospital products sales also posted a 5.5 percent increase over the year-ago period.

Abbott says it expects to incur a one-time after-tax charge of $100 million to $125 million against earnings in the fourth quarter, reflecting the write-down of manufacturing facilities and other assets and employee severance charges.

”This restructuring will improve our global competitiveness and enhance our ability to invest in promising technologies to advance patient care,” says chairman and chief executive Miles D. White told.

For the first nine months of the year, Abbott earned $2.17 billion, or $1.38 a share, up from $936.8 million, or 60 cents a share, a year earlier. Revenue rose to $12.85 billion from $11.84 billion a year ago.


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