Legal provisions swallow chunk of Novartis profit

GMT 11:26 2015 Tuesday ,27 October

Arab Today, arab today Legal provisions swallow chunk of Novartis profit

Basel-based Novartis
Geneva - AFP

Swiss pharmaceutical giant Novartis said Tuesday that its third-quarter net profit fell by 42 percent to $1.8 billion (1.64 billion euros), partially due to provisions to settle a US corruption case.

However the world's largest pharmaceutical company in terms of sales confirmed its 2015 targets, including sales growth from continuing operations in mid-single digits excluding exchange rate effects and growth in operating income in the high single digits.

Last year the company, which makes the high blood pressure treatment Diovan, posted operating income of $10.7 billion on net sales of $58 billion.

In the third quarter, net sales fell 6 percent to $12.3 billion, with the impact of the strong dollar taking a 12-percent hit on the sales figure, which failed to meet expectations of financial analysts polled by Swiss agency AWP.

The company estimated that if early October exchange rates prevail for the remainder of the year, the currency impact for the year would be negative 10 percent on sales and negative 14 percent on core operating income.

Third-quarter earnings were hit by exceptional items, including $400 million in provisions for settling a corruption case in the United States. Novartis has rejected accusations it bribed pharmacists to favour sales of two of its drugs.

Earnings in the third quarter of 2014 were also exceptionally high as it booked the sale of a stake in hepatitis drug maker Idenix to Merck.

Over the first nine months of the year, sales were down 6 percent to $36.89 billion and net earnings plunged 20 percent to $5.97 billion.

Novartis shares were trading down 2.3 percent to 88.50 Swiss francs in mid-morning trading on the Swiss stock exchange, whose main index was off 0.90 percent overall.

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