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Impact Of Abbott’s Work Force Reduction Minimal On Puerto Rico

3Q sales and earnings increase with layoffs and consolidations; expansions and new operations geared to biologics and manufacturing


October 17, 2002
Copyright © 2002 CARIBBEAN BUSINESS. All Rights Reserved.

The results of Abbott Laboratories’ increases in sales and earnings for its third-quarter (3Q) 2002 were impacted by news that the company would consolidate global operations and reduce its work force by 2,000.

The good news is that the company is looking to grow in biotechnology and high-technology manufacturing, two areas in which Abbott’s local operations are dominant.

"The impact of a work force reduction on Puerto Rico will be minimal," said Abbott spokesman Chris Bono. "We announced a net personnel reduction of 2,000 for the entire global work force [of 70,000], including about 1,000 employees in the U.S. With Puerto Rico’s manufacturing operations being part of the continental U.S. division, there should be little or no impact on the local work force."

This month, Abbott is expected to announce the groundbreaking of a $200 million biotechnology plant in Puerto Rico. It is part of the company’s plan to invest approximately $450 million over the next several years to expand existing facilities and build new operations in high-growth areas such as biologics and potent drug manufacturing.

Abbott’s 3Q 2002 sales increased 3.5% to $4.3 billion from $4.2 billion in 3Q 2001. Net earnings for the quarter were $720 million, or $0.46 diluted earnings per share, a 14% increase compared with $631.4 million, or $0.40 diluted earnings per share, in 3Q 2001. Key products Kaletra, Flomax, and Mobic increased their sales by 52%, 19.1%, and 11.9%, respectively.

Two key products for Abbott are manufactured in Puerto Rico. Sales of Biaxin, a treatment for respiratory infections introduced in January, were $302 million as of September. According to the 3Q report, Biaxin reversed a trend of sales declines. The second product, Synthroid, is the second biggest seller for the company, accounting for $177 million worldwide, but its sales fell 17.8% compared with 3Q 2001.

Abbott has nearly 2,700 employees in Puerto Rico. Abbott Barceloneta contains a bulk manufacturing plant and a diagnostics finishing operation with 2,300 employees. Abbott Jayuya, with 180 employees, is the newcomer; it was acquired last year in the company’s purchase of Knoll’s BASF. Another 200 employees are part of Abbott’s sales & marketing operation in Carolina.

Earnings-per-share guidance for 4Q 2002 is $0.55 to $0.57, excluding one-time charges, while full-year 2002 earnings-per-share guidance remain at $2.06 to $2.08. Abbott expects to incur a one-time-after-tax charge of $100 million to $125 million in the 4Q for the write-down of manufacturing facilities and employee severance changes, with after-tax annual savings of $80 million to $100 million expected by 2005.

This Caribbean Business article appears courtesy of Casiano Communications.
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