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Posted: 10:39 AM- Due to a shift in distribution channels, Utah Medical Products, Inc., saw gross profits decline 2 percent and earnings per share dip 3 percent in the first quarter of 2007.
That despite a slight increase in sales.
International sales at wholesale prices were up 20 percent, while domestic sales at retail prices were down 5 percent, the company reported. International sales are made through distributors who keep a portion of the profits, making international sales less lucrative than domestic transactions, said chief administrative officer Paul Richins.
"When we have higher sales internationally, our overall gross margin decreases," Richins said.
The Midvale-based maker of disposable and reusable medical devices said overall first-quarter sales didn't change much compared to 2006. Sales of gynecology and electrosurgery devices were up (9 percent) as were blood pressure monitoring components (4 percent). But neonatal product sales were down 1 percent, and obstetrics product sales dropped 6 percent.
Net income was down 4 percent due to a drop in earnings before taxes, combined with a higher income tax provision rate. The increased tax rate resulted primarily from IRS discontinuance of the extraterritorial income exclusion (ETI) deduction, a favorite of large U.S. exporters.
"The tax issue will continue to have an impact," Richins said. "The program that replaces the ETI deduction is not nearly as beneficial to us."
Shares of Utah Medical, traded on Nasdaq under the symbol UTMD, were holding steady at $32.94 in mid-morning trading today.