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AstraZeneca disappoints with fourth quarter earnings

Last updated: 08:34 05 Feb 2015 GMT, First published: 09:34 05 Feb 2015 GMT

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Anglo-Swedish pharmaceuticals giant AstraZeneca (LON:AZN) unveiled a fall in profits despite notching up the fourth consecutive quarter of revenue growth.

Fourth quarter revenue was up 2% year-on-year (yoy) to US$6,683mln, taking the full-year revenue to US$26,095mln, up 3% yoy on a constant exchange rate (CER) basis.

Fourth quarter revenue was 2% below consensus, according to broker Jefferies, primarily due to lower than expected sales of Nexium and Symbicort.

Sales revenue in 2015 is expected to decline by a mid-single-digit percentage on a CER basis, the company said.

Underlying profit before tax in the fourth quarter fell 43% - or 34% on a constant exchange rates basis - to US$1,068mln from US$1,859mln the year before.

Full-year profit before tax eased 19% (13% CER) to US$5,398mln from US$6,334mln.

The company said the full-year results were in line with guidance issued at the time of its third quarter results, but Jefferies noted fourth quarter earnings per share (EPS) missed consensus by 7%, with higher general & administration costs only partially offset by a lower tax rate.

Earnings per share of the core business in 2015 are expected to grow by a mid-single digit percentage, according to guidance issued by the company.

“2015 EPS guidance to be ‘broadly in-line with 2014 at current FX [foreign exchange] rates implies 2015E EPS of circa US$4.20-US$4.36, in-line with our expectation that management remains committed to the 1.5x dividend cover, implying EPS of at least US$4.20 (Consensus US$4.02; Jefferies’ estimate: US$4.21),” Jefferies said.

 Pascal Soriot, chief executive of Astra, said: "Our guidance for 2015 reflects our focus on creating value by investing in our new brands and exciting pipeline while we continue improving productivity to protect our profitability in the face of patent expiries.

“With the depth of our science and the momentum we have built across our organisation, we are on track to return to growth by 2017 and are well positioned to deliver our long-term goals," he added.

The board has declared a second interim dividend of US$1.90 per share, bringing the dividend for the full year to US$2.80.

The company also announced it is to buy the branded respiratory business of Actavis in the US and Canada. Astra will pay Actavis US$600 million on completion of the acquisition and low single-digit royalties above a certain revenue threshold.

The Actavis deal builds on the acquisition of Almirall's respiratory portfolio in 2014 by extending the company's development and commercialisation rights into the US for both Tudorza Pressair and Duaklir Genuair.

Shares fell 3% to 4,547p on the results.

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