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MarketScreener Homepage  >  Equities  >  Swiss Exchange  >  Novartis AG    NOVN   CH0012005267

NOVARTIS AG

(NOVN)
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Novartis flags faster sales and profit growth for 2015

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01/27/2015 | 09:00am EDT

ZURICH (Reuters) - Swiss drugmaker Novartis (>> Novartis AG) said sales and profits would rise at a faster pace this year as recent drug successes and its portfolio overhaul help it weather competition from cheaper generic medicines.

ZURICH (Reuters) - Swiss drugmaker Novartis (>> Novartis AG) said sales and profits would rise at a faster pace this year as recent drug successes and its portfolio overhaul help it weather competition from cheaper generic medicines.

Stripping out the impact of currency fluctuations, the Basel-based firm said it expected mid-single digit sales growth in 2015 while core operating income would increase at a high-single digit rate.

Still, a surge in the Swiss franc following the Swiss central bank's (SNB) decision to scrap its cap on the currency's value may complicate Novartis' efforts to improve margins.

Chief Executive Joe Jimenez said he would review Swiss costs following the franc rise, but would continue to invest in the country, reiterating comments made to Reuters in Davos last week.

He said the franc's surge would not derail efforts to increase margins since the company would take a hard look at procurement and other services it has in Switzerland.

Novartis, which generates just 2 percent of sales but has about 13 percent of its costs in Switzerland, said it expected the stronger franc to knock about 12 percentage points off core operating income this year and 7 percentage points off sales.

To eke out further savings, Novartis has consolidated some back-office functions, which are spread across all divisions and account for around $5 billion (3.3 billion pounds) in expenses, into one shared service organisation.

Shares in Novartis, which slumped as much as 16 percent on the day the SNB scrapped the cap, gained 1.6 percent by 1350 GMT, outperforming a flat European healthcare sector <.SXDP>.

Novartis unveiled a series of deals last year which will see it focus on a smaller number of higher-margin businesses once it concludes a $20 billion asset swap with GlaxoSmithKline (>> GlaxoSmithKline plc) in the first half.

The company hopes the restructuring, as well as the recent approval of its new psoriasis drug Cosentyx which could bring in annual sales of more than $1 billion, will help it buffer cheaper copycat competition to blood pressure medicines Diovan and Exforge.

The anticipated launch of heart failure treatment LCZ696 should also generate multi-billion-dollar revenues. Analysts expect the drug to gain approval in the United States by the middle of this year.

Net sales fell 2 percent in the fourth quarter to $14.63 billion, slightly ahead of the average forecast for $14.6 billion in a Reuters poll. Core net income rose 1 percent to $2.9 billion in line with forecasts.

The company said it would raise its dividend to 2.60 Swiss francs per share for 2014 from 2.45 francs last year. This was below the average forecast for 2.67 francs in a Reuters poll.

(Additional reporting by Ben Hirschler; editing by Jason Neely and David Clarke)

By Caroline Copley

Stocks treated in this article : Novartis AG, GlaxoSmithKline plc
Stocks mentioned in the article
ChangeLast1st jan.
CLARKE INC. -0.99% 5.99 Delayed Quote.-51.85%
EURO / SWISS FRANC (EUR/CHF) -0.15% 1.07504 Delayed Quote.-0.64%
GLAXOSMITHKLINE PLC -0.90% 1474.941 Delayed Quote.-16.38%
JASON CO., LTD. 6.98% 843 End-of-day quote.131.59%
NOVARTIS AG -0.06% 81.53 Delayed Quote.-11.23%
RISE, INC. -3.70% 26 End-of-day quote.-13.33%
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Financials (USD)
Sales 2020 49 760 M - -
Net income 2020 8 967 M - -
Net Debt 2020 18 028 M - -
P/E ratio 2020 22,1x
Yield 2020 3,54%
Capitalization 196 B 196 B -
EV / Sales 2020 4,31x
EV / Sales 2021 3,96x
Nbr of Employees 110 000
Free-Float 86,9%
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Income Statement Evolution
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Mean consensus OUTPERFORM
Number of Analysts 22
Average target price 107,12 $
Last Close Price 89,12 $
Spread / Highest target 45,4%
Spread / Average Target 20,2%
Spread / Lowest Target -8,60%
EPS Revisions
Managers
NameTitle
Vasant Narasimhan Chief Executive Officer
Hans Jörg Reinhardt Independent Non-Executive Chairman
Harry Werner Kirsch Chief Financial Officer
John Tsai Chief Medical Officer
Elizabeth Theophille Chief Technology & Digital Officer
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