UPDATE: Biomet's 2Q Sales Indicate Industry Under Pressure
January 06 2011 - 2:37PM
Dow Jones News
Biomet Inc. reported Thursday sluggish fiscal second-quarter
sales that indicated a struggling orthopedics market hurt by the
economic downturn isn't yet in recovery mode.
Shares of Biomet's publicly traded rivals were lower in the wake
of Biomet's report, with Zimmer Holdings Inc. (ZMH) recently down
3% at $52.68 and Stryker Corp. (SYK) 1.4% lower at $53.89. Biomet
is smaller and its fiscal quarters end a month earlier than usual,
but its results are closely watched for early clues about the
market's condition.
In this case, Biomet reported flat hip sales and a 3% increase
in knee sales for the quarter ended Nov. 3, excluding the impact of
currency rates, down from growth rates seen in the prior
three-month period. U.S. hip-and-knee sales slowed to 2% growth
from 5% growth in the quarter ending Aug. 31.
The market may rebound at some point, as the companies expect.
"But we're going to have to wait a little bit longer," Jefferies
& Co. analyst Raj Denhoy said.
JPMorgan analyst Michael Weinstein said the results reinforce
his firms' recent survey work indicating that market conditions
continued to weaken during autumn. Among other replacement joint
makers, Smith & Nephew PLC (SNN) recently traded down 1.9% at
$51.13 while Wright Medical Group Inc. (WMGI) was down 1.3% at
$15.99.
The orthopedics market has shown some economic vulnerability.
Replacement hips and knees address painful, arthritic problems with
original parts, but the procedures can be deferred by patients
worried about out-of-pocket costs or long stretches off work for
recovery.
"We believe that market growth rates for orthopedic
reconstructive products continued to be depressed in the quarter,"
Jeffrey Binder, Biomet's president and chief executive, said in a
release. "However, an improving economy, favorable demographics and
product innovation should stimulate long‐term market growth, and we
continue to make significant research and development investments
to address unmet clinical needs across our business."
For the quarter ended Nov. 30, Biomet's loss widened to $7.6
million from $7.2 million a year earlier. Excluding items such as
costs related to the buyout, it reported a profit of $66 million,
down from $74.8 million. Net sales slipped 0.4% to $698.3 million,
but were up 2% excluding currency effects.
-By Jon Kamp, Dow Jones Newswires; 617-654-6728;
jon.kamp@dowjones.com
--Matt Jarzemsky contributed to this article.
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