Posted in Medical Device Business by Nancy Crotti on January 14, 2015
As the U.S. dollar strengthens amid global economic uncertainty, travelers aren’t the only ones affected. Major medtech companies including St. Jude Medical and Stryker are feeling the pinch, too.
St. Jude Medical on Wednesday reported that the impact of foreign currency held down sales growth in the fourth quarter ended January 3. The Little Canada, MN–based says sales for the quarter were up 1% year-over-year, to $1.44 billion, but it would have been a 5% growth if currency didn’t have an effect.
The news comes a day after a Stryker announced that a stronger dollar would likely hamper 2015 earnings.
Stryker (Kalamazoo, MI) reported in a preliminary earnings announcement that it expects the strong dollar to slice about 20 cents from its per-share profit this year. The orthopedic medical device company previously forecast a currency exchange hit of 10 cents to 12 cents on its 2015 per-share earnings.
Stryker forecast adjusted fourth-quarter earnings of $1.43 to $1.45 per share, with net sales growing 6.1 % to $2.6 billion. Analysts on average were expecting fourth-quarter earnings of $1.46 per share on revenue of $2.63 billion, according to Thomson Reuters.
"We delivered solid operational earnings, which were negatively impacted by recent foreign currency movements,” Stryker chairman and CEO Kevin A. Lobo said in a statement.
U.S. manufacturers that sell products overseas are hurt by a rising dollar when theyexchange revenue earned abroad back into dollars. The dollar is trading near a nine-year high against the Euro amid reports of sluggish global economic growth and renewed economic woes in Europe (even as the U.S. economy strengthens).
The dollar’s value has increased more than 10 % over other currencies, including the Euro, according to a report in U.S. News.
The dollar has benefited from more upbeat U.S. economic prospects compared with the rest of the world and is trading near a nine-year high against the Euro.
At the beginning of 2014,1 Euro could be exchanged for about $1.38. By mid-December, the Euro could fetch $1.24. As of today, the exchange rate fell to $1.18.
Refresh your medical device industry knowledge at MD&M West, in Anaheim, CA, February 10-12, 2015.
Nancy Crotti is a contributor to Qmed and MPMN.
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