Abbott Labs 4Q16 Earnings Call Notes

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Abbott Laboratories’ (ABT) CEO, Miles White on Q4 2016 Results

Key policies for us to watch are tax and currency

“You know, it’s hard to speculate. I’d say in general I’m optimistic, and I’d say for a number of reasons. Some of the things that have been talked about won’t necessarily directly affect us. They may affect a number of multinationals. Obviously our new administration is pro-business, but there’s a lot of moving parts in that, as you know. The things I look for that might affect us, I think early on, I think we’re all waiting to see if there’s a tax reform package that would allow us the ability to access overseas cash and repatriate cash, et cetera. I think that would make a big difference for a lot of multinationals. I don’t really expect to see any changes in the Affordable Care Act directly affect us as much as I think they’ll affect other segments of the healthcare industry or business, and I think a lot of the effort will be pointed at other segments more than the spaces we’re in. At least as far as that is impacted, we’re primarily a diagnostic device company in the United States, so I think that to some degree, some of that impact could be favorable for us.

The other things that I watch going forward is policies that affect strong dollar-weak dollar – you know, strength of currencies and so on, because we’re so geographically diverse internationally. I mean, I think one of the benefits – it’s not the primary benefit – but one of the benefits of the St. Jude acquisition is it does spread and balance us into developed market currencies a little more than we have been, and in general I’d like to see stability in the currency markets for us relative to the dollar, which has been a headwind for us for at least four years now. I think that will affect all multinationals.

So you know, while there’s a lot of uncertainty around the various things that this administration appears to be making priorities out of, I’d say that there are relatively few that would impact us early on, and I think the impact is likely to be favorable, that being primarily tax and/or cash access.”

Going to be conservative on M&A for a bit

‘ Obviously for the next little while, we’re not going to be putting a lot of emphasis into M&A. We’re going to hold back on magnitude of share repurchase, et cetera. We’re maintaining our dividend, growing it a bit, and a lot of emphasis will be put on, I’d say, rapid pay down or reduction of debt. I think that’s kind of a prudent place to be for the nearest term, so we’re being very, very prudent about cash use, cash flow, et cetera internally. I think we can do that for a while here and put ourselves back in a range where I think a conservative financial company like us would be, and get back to kind of the normal balance.