Astra raises earnings guidance

28th Jul 2011 07:56

Anglo-Swedish drugs giant AstraZeneca raised its full-year earnings outlook and pledged to return more cash to shareholders, as second-quarter sales and profits came in marginally ahead of expectations.Reported profit before tax slid 2%, or 4% on a constant exchange rates (CER) basis, to $2.86bn from $2.92bn the year before. Core profit before tax dipped to $3.22bn from $3.53bn in the second quarter of 2010, representing a 9% decline in actual terms and an 11% dive on a CER basis.Revenue rose 3% (but fell 2% on a CER basis) to $8.43bn from $8.18bn; the market had been bracing itself for zero growth in the top line.The company said it saw strong double-digit percentage growth year-on-year on a CER basis in its Crestor, Symbicort and Seroquel XR drugs. It also highlighted the strong performance of emerging markets, where revenue jumped 10% on a CER basis but, as widely expected by the market, it suffered at the hands of competitors selling generic versions of its drugs; Astra reckons it lost more than $0.5bn in revenue from generic competition and also the impact of government price interventions.Core earnings per share (EPS) slipped 3% (CER: -5%) to $1.73 from $1.79 in the second quarter of 2010, marginally ahead of market consensus of $1.72.The company has raised its target for full-year core EPS by a further 10 cents to a range spanning from $7.05 to $7.35, reflecting the re-phasing and expected increase in net share repurchases and a beneficial impact from exchange rate movements realised in the first half compared to guidance rates.Core research & development expense increased by 8% at CER, reflecting the impact of several late stage clinical programme starts which commenced late 2010 and early 2011.Core Selling, General & Administrative (SG&A) expense increased by 9% at CER, which includes the impact of the excise tax related to US healthcare reform and a one-time expense for termination of a marketing and distribution contract in the US, in addition to investments in Emerging Markets and product launches.As at 30 June 2011, outstanding gross debt (including loans, short-term borrowings and overdrafts) was $9,582m (31 December 2010: $9,222 million). Of the gross debt outstanding at 30 June 2011, $372m is due within one year (31 December 2010: $125 million). Net Funds of $1,032 million have decreased by $2,621m during the year."Despite the anticipated impact of generic competition and government pricing interventions in the quarter, we are able to raise our core earnings per share guidance and increase our shareholder cash return targets for the full year. The approval of Brilinta in 41 countries around the world, most recently in the US, demonstrates our commitment to deliver our global, innovation-driven biopharmaceuticals strategy," said Astra chief executive officer Net share repurchases totalled $2.2bn in the first half, and could reach $5bn over the full-year, depending on the timing of the sales of Astra Tech.The company has declared an interim dividend of 85 cents, equivalent to 51.9p, up from last year's interim divi of 70 cents. The board intends to rebalance dividend payments so that the interim pay-out represents around one-third of the previous year's dividend.The shares moved up 27p to 3,037p on the announcement of the results.--jh