Covidien Reports Higher Than Expected Profits

Medical device manufacturer Covidien (NYSE: COV) reported a rise in 1st quarter net income to $412 million, or 82 cents per share, from $386 million, or 76 cents per share. Sales also rose to $2.75 billion from $2.56 billion. Analysts polled by FactSet had expected earnings of 76 cents a share for the quarter and $3.30 for the year.

The profit increase and sales growth were achieved through the increased sales volumes, new products, favorable foreign exchange moves and the benefits of the company's restructuring program.

A modest increase in operating margin is expected. It should be in the 21% to 22% range for the fiscal year, compared with prior guidance of 20% to 21%.

Free cash flow should rise to over $1.5 billion from earlier guidance of approximately $1.4 billion.