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Generic drugs giant Teva sinks after second quarter earnings disappoint, full-year guidance slashed

Teva reported an 18.4% drop in second quarter earnings to US$1.02 per share excluding one-off items
generic pills
Rumours circulated last month that Teva was lining up AstraZeneca boss Pascal Soriot to take over as chief executive

Teva Pharmaceutical Industries Ltd (NYSE:TEVA) saw its share price plummet in pre-market trading after the generic drugs giant missed second quarter expectations and cut its full-year outlook.

Weaker prices in the States meant Teva reported an 18.4% drop in second quarter earnings to US$1.02 per share excluding one-off items (Q2 2016: US$5.7bn).

The weaker profitability came despite the group generating revenues of US$5.7bn, ahead of the US$5.04bn it posted last year and beating consensus expectations of US$5.68bn.

Revenue from the generics business came in at US$3.08bn, just below the US$3.12bn analysts had originally pencilled in.

Forecasts cut, divi lowered and jobs to be axed

The poor performance meant Teva cut its adjusted earnings per share outlook to US$4.30 – US$4.50 from US$4.90 – US$5.30

Interim chief executive Yitzhak Peterburg said the drugmaker was now focused on implementing “meaningful cost reductions”, with reports suggesting that it will axe 7,000 jobs by the end of the year.

Speaking of axes, the quarterly dividend pay-out was also chopped by 75% to US$0.085 per share, compared to US$0.34 for the same period last year.

Shares were already down by almost a quarter in 2017 alone, and they dived by another 17.4% in pre-market trade to US$25.80.

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