Medtronic shares slip despite results in line with forecasts

Device giant Medtronic reports sales and earnings in line with its own forecasts but saw its shares dip in US trade after analysts had expected more.

Chief executive Omar Ishrak said the the third quarter performance was solid, "with sustained execution resulting in another quarter of market outperformance".

Ireland largest listed company and the world’s biggest maker of heart-rhythm devices, said third quarter profit increased by 12 per cent to $1.095 billion with revenues on a constant currency basis up 6 per cent at $6.9 billion.

On a per share basis, the company posted profit of $1.06 excluding one-time items for the three months to January 29th, in line with the $1.06 average prediction of 23 analysts.

Strong sales of new products were seen helping the group continue to take market share from rivals.

“We have delivery at the high end of the projected range for [sales of] new products and we expect to sustain that,” Mr Ishrak said in an interview with The Irish Times.

On overall sales, he said the company had committed to delivering “mid-single digit growth on a constant basis regardless of what happens and we are doing exactly that”.

The results were adversely impacted by currency movements, which knocked $344 million off sales in the quarter and around $1.3 billion so far this financial year.

While Mr Ishrak said the impact of foreign exchange on the revenue line was “to some extent expected”, he noted that there was also an knock through impact on earnings.

Medtronic is still digesting the $49.9 billion January 2015 acquisition of Dublin-headquartered rival Covidien, the biggest purchase in its history, which enabled it to move domicile to Ireland where corporate taxes rate are lower.

The deal, which almost doubled Medtronic’s sales, is expected to generate $850 million in cost savings by the end of fiscal 2018.

“It is a three-year integration programme and we are at the end of year one,” Mr Ishrak said. “We are on track on culture and on financial performance. I’m really pleased how it is performing to what were pretty lofty goals.”

The Covidien deal the largest corporate inversion transaction to date and was subject to sustained criticism in Congress

Medtronic became the largest company based in Ireland when it began trading on the New York Stock Exchange, after the merger.

The company employs more than 85,000 people worldwide, including more than 4,000 in Ireland. – Additional reporting Bloomberg