cut its full-year earnings estimates, citing lower growth expectations from its bioscience business, and said it will slash 2,500 jobs and close 26 plasma-collection centers in an effort to reduce costs and boost profitability.
The company said that in the second quarter it will take a charge of $200 million, or 30 cents a share, related to severance costs for the 5% workforce reduction. Shares of the company were dropping 5.2% in premarket trading at $24.25 on Instinet.
"While these decisions are difficult, I am confident that these actions are important for the long-term positioning of the company," said Harry M. Jansen Kraemer Jr., Baxter's chief executive. When fully implemented, Baxter expects the plant closings and workforce reductions to save the company 10 cents to 15 cents a share starting in 2004.
For 2003, the company now expects to earn $1.65 to $1.75 a share, including charges, on a sales increase of 8% to 10%. Analysts are calling for sales of $8.8 billion. Sales were $8.1 billion in 2002.
In April, the company estimated full-year earnings of $2.10 to $2.20 a share. Excluding charges, the company now sees earning $1.95 to $2.05 a share. Analysts expect the company to earn $1.99 a share in 2003. The company had a profit of $2 a share last year.
Including charges, the company expects to earn 10 cents to 12 cents a share in the second quarter. Excluding charges, the company expects to earn 40 cents to 42 cents a share. Analysts were looking for 41 cents. The company earned 49 cents a share in the prior-year period.
Baxter said it still believes quarterly sales growth will be 8% to 10% above last year's $2.02 billion. Analysts expect $2.09 billion. Results will be released July 17.
Baxter plans to shut 26 plasma-collection centers, reducing the number of locations to 94 from 120, and a plasma-fractionation facility in Rochester, Mich. The company cited a 20% decline in plasma-derived product pricing for the closings, which will affect about 800 workers.
The Deerfield, Ill., company also plans to reduce the amount of plasma produced to 4 million liters from 4.6 million liters. The company said its plasma products inventory will probably start to decline annually beginning in 2004.