Becton Dickinson & Co.'s (BDX) fiscal first-quarter net income rose 15% with help from margin increases and a boost from foreign currency hedging, although sales were lighter than Wall Street had expected.

The Franklin Lakes, N.J., company pointed toward the lower end of its prior fiscal 2009 sales guidance following a sluggish quarter for medical and surgical products. The company also raised its 2009 earnings outlook, although the increase for the year was smaller than the amount by which first-quarter results topped Wall Street expectations.

Shares sank on Wednesday and were recently down 4.4% to $70.87.

For the quarter ended Dec. 31, Becton reported net income of $312.1 million, or $1.26 a share, up from $271.5 million, or $1.07 a share, a year earlier. Analysts polled by Thomson Reuters had forecast earnings of $1.15 a share, putting the actual results well ahead of forecasts.

The company said its earnings reflected underlying performance as well as the overall impact of foreign-exchange fluctuations and currency hedging gains. Operating margin rose to 24.3% from 21.3%.

Sales of $1.73 billion came in under analysts' $1.77 billion forecast, with the shortfall in the company's Medical business segment. The company said it posted strong sales of insulin delivery products there, but those sales were more than offset by a decline in medical and surgical products - which include injection and sharps disposal products - and an expected decline in U.S. sales of prefillable devices.

Gary M. Cohen, an executive vice president at Becton, said a big issue behind the shortfall was India's move to pull out of a tender with Unicef for procurement of syringes, and he added that the company was waiting for a resolution there. The medical-surgical business also felt some impact overseas from a downturn in the global economy, Cohen said.

He added that it's "too soon to say if there's an impact" in the U.S.

Chief Executive Edward J. Ludwig had said at a conference earlier this month that Becton had not seen any primary demand disruptions in its businesses thus far. While he acknowledged the financial strains on hospitals, he also noted that many of his firm's products are lower-cost items and necessities, such as surgical blades and catheters. Nonetheless, he also noted that the company is carefully controlling costs.

Sales in the overall Medical business in the recent quarter were $890.8 million, down 2% from a year ago. Excluding an unfavorable currency impact, sales would have been up 2%.

The Diagnostics segment posted a 3.3% sales gain to $540.2 million, with currency taking a hit of 3 percentage points. Sales in the Biosciences segment rose 10.5% to $302.5 million, fueled by demand for clinical and research instruments, with currency actually adding slightly to the gain.

Looking ahead, Becton said it now expects sales to land in the lower end of its prior forecast range of 1% to 2% growth this year; that forecast takes into account an expected big hit from foreign exchange rates.

The company, meanwhile, raised its forecast per-share earnings range from November by a percentage point to between 9% and 11% for 2009. That implies earnings of $4.86 to $4.95 a share, up four cents on each end from the prior target range and mostly above Wall Street's $4.88 target.

The sales view reflects the slowdown in the Medical segment, while the earnings outlook reflects the one-time, currency-related sales benefit to the Biosciences business, accelerated share buybacks and continued cost-efficiency programs.

-By Jon Kamp, Dow Jones Newswires; 617-654-6728; jon.kamp@dowjones.com

(Shirleen Dorman contributed to this report.)

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