Zimmer's Q1 income grows but sales remain flat

Zimmer ($ZMH) reported a steady boost in net income during its fiscal 2013 first quarter, but overall sales were flat. The maker of orthopedic, spinal and trauma devices, dental implants and surgical products saw declines in hip replacement sales, and a double-digit drop in spinal sales.

Zimmer's net earnings hit the $218.6 million mark during the first quarter, a healthy 4.1% increase from the $209.6 million figure booked during the 2012 first quarter. Overall net sales reached more than $1.13 billion, down two-tenths of 1% from the 2012 first quarter, something Zimmer blamed, in part, on having two fewer sales days during the quarter.

Zimmer president and CEO David Dvorak said in a statement that the company met its goals, hitting diluted earnings per share of $1.28 reported and $1.41 adjusted, an 8.5% increase year-over-year. And the company proceeded with a massive share buyback program, spending $392 million to snatch up 5.36 million shares. Sales grew in Europe but stayed flat in the U.S., and they dipped slightly in the Asia Pacific region due to currency exchange issues.

Drilling down, Zimmer's surgical and trauma product sales soared, but dental revenue stayed flat. Knee implant net sales climbed in the Asia Pacific region and Europe, but dipped in the U.S. Spinal sales dropped 10%. And hip implant revenue declined across the board.

Zimmer's all-metal hip replacements and many produced by its rivals are now under FDA scrutiny because of safety concerns. Separately, the company is pursuing an ongoing effort to "streamline" its businesses, with efforts including a plant shut down in Austin, Texas in order to consolidate those operations in Minnesota. The company is also slashing about 450 jobs.

- read the release

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