August 25, 2016 / 11:42 AM / 2 years ago

UPDATE 2-Medtronic's profit beats estimates on lower costs

* Reiterates FY17 adj profit forecast of $4.60-$4.70/shr

* Q1 profit $1.03/shr vs est $1.01/shr

* Shares down 1.2 pct in early trading (Adds details, forecast, updates shares)

By Anya George Tharakan and Ankur Banerjee

Aug 25 (Reuters) - Medtronic Plc, the world’s largest standalone medical device maker, reported a better-than-expected quarterly profit, helped by lower costs and a lighter tax burden.

The company’s shares, however, fell about 1.2 percent in early trading on Thursday after it forecast current-quarter profit growth at the lower half of its 12-16 percent growth it expects for 2017 on a constant currency basis.

Medtronic has been beefing up its portfolio of devices for treating heart diseases and delving deeper into the market for less-invasive surgical products.

The company closed its $1.1 billion deal for HeartWare International Inc earlier this week, and has also bought a stake in Israeli robotics company Mazor Robotics Ltd .

The deals underscore Medtronic’s push to broaden its offerings in the minimally invasive surgical products market, which it entered with its acquisition of Covidien Plc last year.

Medtronic, which redomiciled to Ireland through the Covidien deal, currently relies on its core business of developing and selling heart devices, spinal implants, insulin pumps among others.

The company also expects current-quarter revenue growth within its 5-6 percent range for full-year 2017 on a constant currency basis.

Medtronic reiterated its forecast for full-year 2017 adjusted earnings of $4.60 to $4.70 per share. (

Total costs of products sold fell nearly 8 percent in the first quarter ended July 29, while the amount it set aside for income taxes more than halved to $59 million, from a year earlier.

Medtronic’s net earnings rose to $929 million, or 66 cents per share, in the first quarter, from $820 million, or 57 cents per share, a year earlier. The company had an extra week of sales in last year’s first quarter.

Excluding items, Medtronic earned $1.03 per share, ahead of the average analyst estimate of $1.01 per share, according to Thomson Reuters I/B/E/S.

Revenue fell 1.5 percent to $7.17 billion, in-line with the average analyst expectation.

The impact of a stronger dollar took $7 million out of quarterly revenue, which would have otherwise risen more than 5 percent on a constant currency, constant weeks basis. Medtronic gets nearly half of its revenue from outside the United States.

Sales in its cardiac and vascular unit, where Medtronic sells defibrillators, pace-makers, heart valves and stents, dipped 2.1 percent to $2.52 billion, accounting for about 35 percent of total sales in the first quarter.

Up to Wednesday’s close, Medtronic had risen about 12 percent in the last 12 months. (Reporting by Ankur Banerjee and Anya George Tharakan in Bengaluru; Editing by Martina D’Couto)

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