Stryker ($SYK) closed out 2013 with a healthy rise in net sales and earnings in the fourth quarter. Organic growth and acquisitions in China and elsewhere drove those gains, but acquisition costs and recall-related charges prevented those results from reaching higher levels for the year as a whole.
The Kalamazoo, MI, orthopedic device company booked nearly $2.47 billion in net sales during the 2013 fourth quarter, a 4.2% increase over the $2.3 billion in sales that came in over the same period in 2012. Net earnings reached $386 million, a 43% jump from $270 million in the 2012 fourth quarter.
For the year, Stryker said it pulled in $9 billion in net sales, up 4.2% from nearly $8.66 billion in 2012.
But the blemish is here: Net earnings for 2013 dropped to $1 billion, down 22.5% from nearly $1.3 billion in net earnings in 2012. Stryker blamed charges from its Rejuvenate and ABG II metal hip recalls and its ongoing recall of the Neptune Waste Management System with taking a dent out of net earnings. Those expenses were much higher during the year but declined by Q4, reducing their impact at year end.
Stryker's $1.7 billion buyout of robot-assisted surgery outfit Mako ($MAKO) and its $764 million acquisition of Chinese orthopedics giant Trauson Holdings are growing net sales in the long run, but initial expenses related to the transaction also hampered 2013 earnings.
During the quarter and year, Stryker said it generated healthy sales hikes in its reconstructive, MedSurg and neurotechnology/spine divisions. Hip and knee sales remained essentially flat, however.
Stryker's guidance for 2014 predicts 4.5% to 6% of organic sales growth and adjusted net earnings per share in the range of $4.75 and $4.90. This estimate is based on the exclusion of amortization of intangible assets from adjusted net earnings.
Stryker President and CEO Kevin Lobo said in a statement that the company expects to build higher sales in 2014 based on its investments in innovation and globalization.
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