SECOND QUARTER AND HALF YEAR RESULTS 2012
As expected, generic competition and challenging market conditions reflected in lower second quarter revenues. Progress made on execution of long-term priorities, with the on-market portfolio and the pipeline strengthened through recent business development initiatives. Financial targets for full year unchanged.
Revenue for the second quarter was $6,660 million, down 18 percent at constant exchange rates (CER).
-Loss of exclusivity on several key brands accounted for 15 percentage points of the revenue decline. Resilient performance for Crestor. Strong growth continued for ONGLYZATM, Iressa and Faslodex.
-As expected, further limitations in the supply chain at our plant in Sweden continued into the second quarter; the estimated impact on second quarter revenue was around 2 percent. The Company estimates the impact for the full year will be around 1 percent of revenue.
-Emerging Markets revenue increased by 1 percent at CER. Supply chain issues impacted Emerging Markets revenue; adjusted for this, revenue growth would have been around 8 percent.
Core EPS was $1.53 in the second quarter, a 6 percent decline at CER.
-Core EPS benefited by $240 million ($0.19 per share) due to the tax settlement of a cross border transfer pricing issue. The effective tax rate for the full year is now estimated to be around 20 percent.
Reported EPS in the second quarter was down 11 percent at CER to $1.27.
Diabetes alliance will expand through Bristol-Myers Squibb’s acquisition of Amylin Pharmaceuticals.
The Board has recommended a first interim dividend of $0.90. Net share repurchases were $1.6 billion in the first half; target for full year remains $4.5 billion, subject to market conditions and business needs.
Core EPS target range for the full year maintained at $5.85 to $6.15.
Financial Summary
| Group | 2nd Quarter 2012 $m |
2nd Quarter 2011 $m |
Actual % |
CER % |
Half Year2012 $m |
Half Year2011 $m |
Actual % |
CER % |
|
| Revenue | 6,660 | 8,430 | -21 | -18 | 14,009 | 16,722 | -16 | -15 | |
| Reported | |||||||||
| Operating Profit | 1,868 | 2,965 | -37 | -32 | 4,028 | 6,366 | -37 | -35 | |
| Profit before Tax | 1,763 | 2,858 | -38 | -33 | 3,816 | 6,146 | -38 | -36 | |
| Earnings per Share | $1.27 | $1.53 | -17 | -11 | $2.55 | $3.61 | -29 | -27 | |
| Core* | |||||||||
| Operating Profit | 2,269 | 3,322 | -32 | -27 | 5,266 | 7,000 | -25 | -23 | |
| Profit before Tax | 2,164 | 3,215 | -33 | -28 | 5,054 | 6,780 | -25 | -23 | |
| Earnings per Share | $1.53 | $1.73 | -12 | -6 | $3.34 | $3.96 | -16 | -13 |
| * | Core financial measures are supplemental non-GAAP measures which management believe enhance understanding of the Company’s performance; it is upon these measures that financial guidance for 2012 is based. See pages 2 & 4 for a definition of Core financial measures and a reconciliation of Core to Reported financial measures. |
Simon Lowth, Interim Chief Executive Officer, commenting on the results, said: “As we expected, the loss of exclusivity on some key brands and tough market conditions have resulted in a decline in revenue and earnings in the second quarter. Despite these challenges, we are on track to achieve our financial targets for the full year.
“The results in the first half of the year reflect the resilience of several of our brands and the benefits of disciplined cost management. Building on the collaboration with Amgen and the acquisition of Ardea, we continued to bolster our pipeline and portfolio through an exciting opportunity to expand our diabetes alliance with Bristol-Myers Squibb.
“Our long-term priorities remain unchanged. We are driving the performance of brands that retain exclusivity, investing in markets with long-term potential, reshaping the cost base for sustainable competitiveness and continuing to drive for productivity on our investments in innovation, whether internally or externally sourced.”
CONTACT INFORMATION
Media Enquiries:
Esra Erkal-Paler (London) +44 20 7604 8030
Sarah Lindgreen (London) +44 20 7604 8033
Tony Jewell (Wilmington) +1 302 885 4594
Ann-Leena Mikiver (Södertälje) +46 8 553 260 20/+46 707 428836
Analyst/Investor Enquiries:
James Ward-Lilley (London) +44 20 7604 8122
Karl Hård (London) +44 20 7604 8123
Nicklas Westerholm (London) +44 20 7604 8124
Ed Seage/Jörgen Winroth (US) +1 302 886 4065/+1 212 579 0506