Despite the failure of baby food, Abbott Laboratories (NYSE: ABT) was able to improve revenues in the first quarter because of diversification.
Abbott Laboratories was compelled to discontinue producing Similac infant food in the first quarter. As a result, the company’s global sales of baby formula decreased by more than 20% in the first quarter in the US and by 34% globally.
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Problems with the product’s manufacture and selling resulted in a 7% drop in the total food category. However, success in other areas of activity more than made up for the food sales failure. Abbott Laboratories’ overall revenue climbed by 14% year over year in the first quarter, according to the data.
Management claims that the Michigan baby food facility is back up and running, and that formula sales could resume shortly, boosting income.
The FDA just authorized the FreeStyle Libre 3 continuous glucose monitoring gadget for all patients with diabetes aged 4 and above, which is further good news for investors. Because it can considerably enhance patients’ quality of life with diabetes, the gadget is predicted to become immensely popular.
Abbott Laboratories made $1.1 billion in diabetes care sales last quarter, rising 15% year over year and accounting for around 30% of overall health care revenue. According to management, solutions under the FreeStyle Libre brand brought in roughly $1 billion. The release of the new Libre 3 sensor, which is smaller and more precise, might spur even greater growth.
The reopening of the Michigan factory and the introduction of a new device to the market should help Abbott Laboratories make up for the loss of revenue from COVID-19 test sales. Revenue from the selling of tests was $3.3 billion in the first quarter, but it is likely to fall in the future quarters.
The majority of such tests will be sold in the first half of 2022, according to management. The business expects that, like it did last quarter, it will be able to compensate for the fall in sales in this division by cutting costs elsewhere.
Abbott Laboratories’ high level of variety is thus a strength. Different parts of the business can compensate for each other’s losses, allowing the company to expand even in adverse economic times.
