Swiss pharmaceutical giant Novartis AG (NVS) reported Tuesday lower profit in its fourth quarter, mainly reflecting the impact of its divestments as it aims to focus on core businesses of innovative pharmaceuticals, eye care, and generics. Net sales also were hurt by weak Pharmaceuticals segment, despite constant currency growth in Growth Products and Emerging Growth Markets. Looking ahead, the company projects growth in net sales and core operating income for fiscal 2015.
Further, Novartis said its Board proposed a dividend payment of 2.60 Swiss francs for 2014, up 6 percent from 2013, representing the 18th consecutive dividend increase since the creation of Novartis.
Under its previously announced plan, Novartis divested its Animal Health Division to Eli Lilly and Co. (LLY), and agreed to divest influenza vaccines business to Australian specialty biopharmaceutical company CSL Ltd. (CSL.AX) and non-influenza vaccines business to GlaxoSmithKline plc (GSK).
Novartis expects the transaction with GSK to be completed in the first half of 2015, and the transaction with CSL Limited to be completed in the second half of 2015.
For the fourth quarter, net income attributable to shareholders declined to $1.49 billion from last year's $2.03 billion. Earnings per share declined to $0.61 from $0.82 a year ago.
The results reflected lower operating income, partially offset by higher income from associated companies, which included a $0.4 billion pre-tax gain from the divestment of the shareholding in LTS Lohmann Therapie-Systeme AG and lower tax expense.
Net loss from discontinuing operations was $961 million, compared to last year's profit of $43 million. Net income from continuing operations, however, grew to $2.45 billion from prior year's $2.02 billion.
Group core net income was $2.9 billion and core earnings per share was $1.21.
Group net sales amounted to $14.63 billion, down 2 percent from the prior year's $15.08 billion, while it was up 4 percent on Constant currencies basis. Including the blood transfusion diagnostics unit, Group total net sales decreased 3 percent.
Net sales from continuing operations were $13.13 billion, down 2 percent from last year on a reported basis, but up 3 percent at constant currency.
Pharmaceuticals net sales fell 6 percent with volume growth of 8 percentage points offset by the negative impact of generic competition, largely for Diovan monotherapy and Exforge.
Sales of Growth Products climbed 18 percent at constant rates. These products contributed 46 percent of division net sales, compared to 39 percent last year.
Net sales in Emerging Growth Markets grew 12 percent at constant rates, excluding the blood transfusion diagnostics unit, led by Brazil and Russia.
Looking ahead to fiscal 2015, Group net sales are expected to grow mid-single digit on Constant currencies basis, after absorbing the impact of generic competition expected to be as much as $2.5 billion, compared to $2.4 billion in 2014. Group core operating income is expected to grow ahead of sales at a high-single digit rate at constant rates.
The outlook assumes that GSK transactions will close on March 31.
Novartis shares were gaining 0.63 percent to trade at 87.55 francs.
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