AZN: Year-to-Date and Q3 2018 Results
AstraZeneca PLC
8 November 2018 07:00 GMT
Year-to-Date and Q3 2018 Results
AstraZeneca Returns to Sales Growth; New Medicines and Emerging Markets Lead the Way
Product Sales increased by 4% in the year to date (2% at CER1), supporting full-year guidance. For the quarter, Product Sales increased by 8% (9% at CER), driven by the strong performance of new medicines2 (+85%, +86% at CER) and the sustained strength of Emerging Markets (+12%, +16% at CER). Oncology sales increased by 56% in the quarter (57% at CER); China and US sales increased by 32% and 25%, respectively. The pipeline, designed to deliver sustainable growth and advances in treatment for patients, produced further positive news flow in the period; regular, additional news will continue. The Company is on track to deliver its FY 2018 Product Sales and Core EPS guidance.
| YTD 2018 | Q3 2018 | |||||
| $m | % change | $m | % change | |||
| Actual | CER | Actual | CER | |||
| Total Revenue | 15,673 | (6) | (8) | 5,340 | (14) | (13) |
| Product Sales | 15,281 | 4 | 2 | 5,266 | 8 | 9 |
| Externalisation Revenue | 392 | (81) | (81) | 74 | (95) | (95) |
| Reported Operating Profit3 | 2,310 | (23) | (20) | 851 | (26) | (21) |
| Core Operating Profit4 | 3,480 | (31) | (31) | 1,319 | (29) | (26) |
| Reported Earnings Per Share (EPS) | $0.88 | (34) | (34) | $0.34 | (37) | (36) |
| Core EPS | $1.88 | (37) | (37) | $0.71 | (37) | (33) |
Pascal Soriot, Chief Executive Officer, commenting on the results said:
"Today marks an important day for the future of AstraZeneca, with the performance in the quarter and year to date showing what we expect will be the start of a period of sustained growth for years to come. Commercial execution has been exceptional and our new medicines are now firmly established as the drivers of growth, supporting our continued success in Emerging Markets.
These new medicines are showing great promise, including Tagrisso, Imfinzi, Lynparza in cancer, Farxiga in diabetes and Fasenra in severe asthma. We're also continuing to replenish our early-stage pipeline as we bring our innovative medicines to patients around the world."
Financial Highlights
• Product Sales increased by 4% in the year to date (2% at CER) to $15,281m; new medicines generated additional sales of $1.8bn at CER
• The Reported Gross Margin declined by two percentage points to 78% in the year to date, partly reflecting the favourable impact of manufacturing variances in the first half of 2017 and the dilutive effect of the Lynparza collaboration with MSD5; the Core Gross Margin declined by two percentage points to 80%
• Productivity gains, simplification and the focus on costs continued, with prioritised investment in new medicines and in China delivering strong returns
o Total Reported Operating Expenses were stable in the year to date (down by 2% at CER) to $11,589m. Total Core Operating Expenses increased by 4% (2% at CER) to $10,253m
o Reported R&D costs declined by 7% in the year to date (8% at CER) to $3,920m; Core R&D costs declined by 4% (6% at CER) to $3,800m, driven by efficiency savings and resource optimisation. Reported SG&A costs increased by 4% in the year to date (1% at CER) to $7,431m; Core SG&A costs increased by 10% (7% at CER) to $6,215m, reflecting support for new medicines and growth in China
• Externalisation Revenue declined by 81% in the year to date to $392m, partly driven by the impact of $997m of income in YTD 2017 as part of the aforementionedcollaboration with MSD. Reported Other Operating Income & Expense increased by 55% to $1,525m; Core Other Operating Income & Expense increased by 4% in the year to date (3% at CER) to $1,143m, with the difference between the Reported and Core performances reflecting a legal settlement in the first half of the year. The Company anticipates a significant sum of Externalisation Revenue and Other Operating Income & Expense in the final quarter of the year
• Restructuring costs declined to $271m in the year to date (YTD 2017: $645m); capital expenditure also declined to $728m (YTD 2017: $849m). The Company continues to anticipate declines in restructuring costs and capital expenditure over the full year
• Reported EPS of $0.88 in the year to date represented a decline of 34%. The performance reflected a decline in Total Revenue, the Reported Gross Margin and the increase in Reported SG&A costs. Core EPS declined by 37% to $1.88.
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