Despite 27 percent drop in income
Perrigo achieves record 2Q sales

February 3, 2009
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ALLEGAN — Perrigo Co. net sales for the second quarter of fiscal 2009 were a record $561.5 million, an increase of 29 percent over the second quarter of 2008. Net income was down 27 percent from a year ago to $25.0 million, or 27 cents per share. Excluding certain charges, second quarter fiscal 2009 adjusted net income was $42.7, or 46 cents per share.

For the second quarter revenue from the company’s Consumer Healthcare segment increased by $126 million or 39 percent, driven by $77 million in new product sales. The API segment reported second quarter net sales of $31.9 million compared with $34.6 million a year ago due to lower sales in two key products and unfavorable changes in foreign currency exchange rates, the company indicated. The Rx Pharmaceutical segment second quarter net sales were $40.4 million compared with $38.7 million a year ago. The increase resulted primarily from new product sales of approximately $5.7 million and a slight increase in sales volumes on the company's existing portfolio of products. The Other category, consisting of the Israel Consumer Products and Israel Pharmaceutical and Diagnostic Products operating segments, reported second quarter net sales of $42.8 million, compared with $42.0 million a year ago.

Perrigo incurred a charge of $15.1 million in the second quarter related to the write-down of auction rate securities purchased in Israel from Lehman Brothers. These assets were written down from a face value of $18 million and continue to be held in non-current assets. The market for these securities has been illiquid for more than 12 months, and the credit worthiness of underlying issuers has continued to deteriorate significantly. As a result, the impairment of these securities can no longer be considered temporary, the company noted.

“In the second quarter, we achieved record sales with our new products contributing $84 million to top line growth,” stated Chairman and CEO Joseph C. Papa. “This past quarter, the over-the-counter category grew 4 percent versus second quarter last year and the store brand category grew nearly 17 percent, while Perrigo grew 39 percent. Store brand offerings continue to perform well as our retailers promote these products to help their customers through these trying times.”

Net sales for the first half of fiscal 2009 were $1,041.7 million, an increase of 27 percent over fiscal 2008. According to Perrigo, the increase was driven primarily by its Consumer Healthcare segment and included consolidated new product sales of approximately $156 million. Reported gross profit was $298.5 million, up 20 percent over fiscal 2008, also driven by the Consumer Healthcare segment.

The company is expecting adjusted fiscal 2009 earnings to be between $1.75 and $1.90 per share, which implies a year over year growth rate of adjusted earnings of 11 percent to 20 percent over fiscal 2008.

 “The Perrigo business model remains strong,” concluded Papa. “Despite an unprecedented negative economic environment, we have grown our business and expect to continue to do so given the momentum we have in our healthy OTC business and our strong balance sheet. But we are not immune to the effects of this economy.”

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