Baxter net up 6 percent

By Debra Sherman

CHICAGO (Reuters) - Baxter International Inc (BAX.N: Quote, Profile, Research) posted a 6 percent increase in quarterly profit on Thursday and raised its 2008 outlook, but also announced another delay in getting its Colleague infusion pump back on the U.S. market.

The maker of blood therapy products, medication delivery systems and products used for kidney therapy, issued the higher profit outlook despite slow progress on Colleague, an intravenous pump that delivers medication and fluids into the bloodstream.

The device was recalled almost two years ago. Last quarter, Baxter said it expected the pump to be back on the U.S. market in the second half of 2008.

"I wouldn't say it has hurt our credibility," Chief Financial Officer Robert Davis said in a telephone interview. "People judge a company by how it responds to an event like this and I feel proud of how we've responded. From a financial perspective, it's manageable, otherwise we would not have raised our guidance."

Better gross margins, firmer pricing on most products, greater manufacturing efficiencies and favorable foreign exchange translations also bolstered results.

The gross margin, Chief Executive Robert Parkinson told a conference call, is "the most important financial metric that I look at and it is what I hold my line business executives to in terms of accountability."

He said he expected continued improvements in margins for the foreseeable future.

First-quarter net earnings were $429 million, or 67 cents per share, compared with $403 million, or 61 cents per share, a year ago.