The global recession seems, thus far anyway, to be having little impact on Baxter International. “The fundamentals of our business continue to be very strong,” says Robert Davis, chief financial officer of the Deerfield, Illinois–based pharmaceuticals and medical device manufacturer. “The fact that we’re a diversified health care company across so many product lines and geographies has allowed us to weather the market.”
And spread a little sunshine to investors, who name Baxter the Most Shareholder-Friendly Company in the Medical Supplies & Devices sector. The company increased its fourth-quarter dividend payment by 20 percent over the previous quarter’s, to 26 cents a share, after earnings exceeded analysts’ forecasts (and Baxter’s own guidance) for a fourth consecutive quarter. In January the company reported that fourth-quarter sales rose 4.1 percent year-over-year, to $3.1 billion; when adjusted for the weak dollar’s impact on foreign exchange rates, quarterly sales were up 9 percent and outpaced the company’s expectation of 7 percent. Quarterly net income surged 19 percent year-over-year, to $569 million.
Baxter also maintained its commitment to an aggressive share-repurchase program. Last year the company bought back 32 million common shares, for approximately $2.0 billion, and paid dividends totaling about $550 million. In 2007, Baxter repurchased 34 million shares of its common stock, for $1.9 billion, and paid dividends totaling roughly $704 million.
“This is an environment where many companies are cutting dividends back or holding them flat, but Baxter announced an increase,” notes one grateful investor. “And even in this difficult environment, where many companies are no longer buying back shares, Baxter is.”
But pleasing shareholders is not just about numbers. “We’re responsive and treat each investor as a customer,” Davis says.
Mary Kay Ladone, the company’s vice president of investor relations, says she adheres to five basic principles when communicating with shareholders and potential investors: “simple, transparent, responsive, timely and accurate.”
Adhering to those principles is easier when the message is positive, and Baxter expects to give good news to shareholders for the foreseeable future. In January it announced projections for 2009, including sales growth of 7 percent (excluding the effects of foreign exchange fluctuations), operational cash flow of $2.6 billion and diluted earnings per share of $3.70 to $3.78, up from $3.16 in 2008.
Return to the article: Easy Access In Hard Times
Return to the America’s Most Shareholder-Friendly Companies Rankings
