Medtronic: Hurricane María will reduce quarterly earnings by $250 million
While the company expects some non-recurring expenses directly related to the recovery efforts in Puerto Rico to be excluded from its non-GAAP (non-generally accepted accounting principals) earnings, expenses related to the impact outside of Puerto Rico will be considered operating expenses.
On Thursday as well, BMO Capital lowered its price target on Medtronic to $89 from $92) while maintaining an “Outperform” rating.
Medtronic, which employs some 5,000 workers locally and makes such products as heart devices, did not say if it would lay off employees.
A company statement said that considering the severity of the hurricane, the company’s Puerto Rico facilities fared well, but each sustained damages. The manufacturer has facilities in Villalba, Humacao, Ponce, Juncos and Cataño.
The multinational is operating on a limited basis and like other manufacturers on the island, has increased operations abroad.
“Currently, all of its sites are partially operating, with the assistance of power from back-up generators, and manufacturing is expected to gradually ramp up over the coming weeks. The company continues to work with local and national government agencies, as well as power, communication, and logistics providers to fully restore its operations.
“In line with its business continuity protocols, the company is utilizing existing inventory levels and increasing manufacturing in locations outside of Puerto Rico for many of its products,” the firm said in a statement.
Considered the largest stand-alone device manufacture in the world is donating $1 million toward disaster relief and while it works to minimize María’s financial impact.
“The availability and sales of certain products that are newly launched, were on backorder status, or had lower inventory levels prior to the hurricane are expected to be affected in all four business groups, particularly in the United States in the company’s Minimally Invasive and Restorative Therapies Groups,” the company said in a statement.
Despite noting the $250 million loss, the company said it was still too early to determine the ongoing impact, if any, from María beyond the company’s second quarter.
“However, given the expected strength of new product demand, particularly in the Cardiac and Vascular Group and Diabetes Group, the company continues to expect mid-single digit revenue growth on a comparable, constant currency basis in the second half of the fiscal year,” it added.