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Earnings Fall at Astra Zeneca

Thursday, 26 April 2012
Pharmaceutical giant AstraZeneca reported a profit before tax of $ 2.053 million, representing approximately Skr14 billion, for the first quarter of 2012. This compares with profit of $ 3.288 million a year ago.

Sales totalled $ 7.349 million, compared with $ 8.292 million a year earlier.
Astra Zeneca announced in the first quarter report that President and CEO David Brennan has decided to resign. He leaves the company on 1 June, when he emerges from the board.

The Chief Financial Officer Simon Lowth has been appointed acting CEO.
In addition, former Volvo chief Leif Johansson succeeds Louis Schweitzer as Chairman on 1 June - three months earlier than what had been said before.

"It will allow Leif Johansson lead the selection process for David Brennan's successor, which includes both internal and external candidates," writes Astra Zeneca.

A summary from the company in a press release goes as follows
Revenue for the first quarter was $7,349 million, down 11 percent at constant exchange rates (CER).
•    Loss of exclusivity on several key brands accounted for 8 percentage points of the revenue decline, which included the recognition of a $223 million returns reserve against US trade inventories of Seroquel IR following generic launches at the end of March 2012.
•    Emerging Markets revenue increased by 1 percent at CER, reflecting the quarterly phasing that the Company anticipated. Company anticipates a rebound in the remaining three quarters, but achieving double-digit growth for the full year may be a challenge.   
•    Core EPS was $1.81 in the first quarter, a 19 percent decline at CER compared with the first quarter last year, which benefited by $0.46 from two one-off gains. Excluding these gains, Core EPS would have increased by 2 percent compared with last year.
•    Core gross margin in the first quarter 2011 included a $131 million benefit ($0.07 per share) from settlement of patent disputes with PDL BioPharma, Inc.
•    Core EPS in the first quarter 2011 benefited by $0.39 as a result of agreements reached between the UK and US governments over certain tax matters. 
•    The third phase of the restructuring programme is being implemented with pace, reflected in the $702 million in restructuring costs taken in the first quarter. Reported EPS was down 39 percent at CER to $1.28.
•    Decline in Reported EPS is significantly larger than the decline in Core EPS, largely the result of restructuring costs that were $0.37 higher than the first quarter 2011.  Net cash distributions to shareholders in the first quarter were $3,417 million, through dividend payments of $2,505 million and net share repurchases of $912 million. Core EPS target range for the full year lowered to $5.85 to $6.15.    

David Brennan, Chief Executive Officer, commenting on the results, said: “The anticipated impact from the loss of exclusivity on several brands, together with challenging market conditions, has made for a difficult start to the year in revenue terms. Delivery on our restructuring plans and continued discipline on operating costs, together with the benefits from a lower tax rate, will only partially mitigate the revenue pressures. As a result we have lowered our Core EPS target for the full year to the range of $5.85 to $6.15.”
By Team

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