Hospira earnings decline tied to ongoing remediation

Hospira ($HSP) beat the street today, but repeatedly explained away declines in sales and earnings as being tied to its manufacturing problems.

The specialty drugmaker earned $40.2 million, or 24 cents per share, compared with $149.9 million, or 88 cents per share a year earlier. Adjusted for expenses for things like plant remediation and it reports earnings of 47 cents a share, Reuters reports. Analysts were only looking for earnings of 45 cents a share, so there's today's good news. The news service says earnings were boosted by an 11% bump in revenue from Europe, Middle East and Africa, growing to $127.9 million.

"Hospira delivered first-quarter results in line with our expectations, which reflects a difficult year-over-year comparison and the impact of our quality improvement initiatives," said F. Michael Ball, chief executive officer. "Going forward, we remain firmly focused on advancing our remediation efforts and, at the same time, expanding our global footprint and capacity to capitalize on our growth opportunities."

The company has been working through manufacturing issues raised by the FDA at plants in Austin, TX, and Clayton and Rocky Mount, NC. The Rocky Mount plant closed in December for maintenance then resumed production in January after throwing extensive resources at fixing problems. The plant is currently operating at 60% to 70% production and will remain there at least through mid year and remediation work is ongoing. 

A 4% decline in net sales to $966 million was attributed, in part, to the "adverse impact to supply of the company's quality-improvement and remediation initiatives." A nearly 50% drop in adjusted income from operations to $104 million, was tied to the same issues.

A $5 million increase in capital expense, however, was related to the building of a new plant in Vizag, India.

- here's Reuters' story
- get the earnings press release