How AstraZeneca Has Fared During 2012

Published in Investing on 5 December 2012

AstraZeneca (LSE: AZN) has issued a series of disappointing statements this year.

AstraZeneca (LSE: AZN) (NYSE: AZN.US) has gained 0.13% to 2,982p so far during 2012, making the share one of the year's less exciting performers in the FTSE 100 (UKX). During the same time, the blue-chip index has gained 4%.

In February, the company released its fourth-quarter and full-year results for 2011. For the three months to the end of December 2011, Britain's second largest drug maker reported a fall in pre-tax profits to $2.05bn compared with $2.28bn in 2010. Revenue for the full year fell by 2% at constant exchange rates (CER) to hit $33.59bn, and core operating profit was down 4% at CER to $13.17bn. However, the dividend was increased by 10% to $2.80 per share for the full year.

At the time, the company also unveiled plans to cut 7,300 jobs as part of its restructuring initiative to make annual savings of $1.6bn by the end of 2014. It said it expected revenue in 2012 to be "adversely affected by government interventions on pricing and ongoing generic competition including the anticipated loss of market exclusivity for Seroquel IR and Atacand in global markets, as well as for Crestor in Canada."

During April, AstraZeneca announced that chief executive David Brennan was leaving on 1 June, as its first-quarter results showed further decline. Revenue fell 11% at CER to $7.35bn, and pre-tax profit was down 38%. Loss of exclusivity on several key brands accounted for 8 percentage points of the revenue decline. Brennan 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."

Then in July, the struggling company showed more signs of trouble -- revenue for the second quarter was $6.6bn, down 18% at constant exchange rates (CER).

However, Simon Lowth, interim chief executive officer, reassured investors. He said: 

"As we expected, the loss of exclusivity on some key brands and tough market conditions have resulted in a decline in revenue and earnings in the second quarter. Despite these challenges, we are on track to achieve our financial targets for the full year.

"The results in the first half of the year reflect the resilience of several of our brands and the benefits of disciplined cost management. Building on the collaboration with Amgen and the acquisition of Ardea, we continued to bolster our pipeline and portfolio through an exciting opportunity to expand our diabetes alliance with Bristol-Myers Squibb.

"Our long-term priorities remain unchanged. We are driving the performance of brands that retain exclusivity, investing in markets with long-term potential, reshaping the cost base for sustainable competitiveness and continuing to drive for productivity on our investments in innovation, whether internally or externally sourced."

Revenue for the third quarter -- reported in October -- was $6.6bn, down 15% at CER.

The company's newly appointed chief executive, Pascal Soriot, commented on the results, saying: 

"As expected, the Company's financial performance in 2012 largely reflects the ongoing impact from the loss of exclusivity for several brands in key markets, as well as the challenges that confront the pharmaceutical industry as a whole. Since joining AstraZeneca, I've been deeply impressed by the commitment, talent and passion of our people and by their determination to deliver against our targets. As I take up my new role as Chief Executive, my priority is to restore the Company to growth and scientific leadership."

No doubt some AstraZeneca investors will be hoping for better share-price progress next year. For the moment though, the company offers a good dividend, yielding around 6% and covered more than two times its profits.

If you are seeking blue-chip ideas for 2013 and beyond, "The FTSE 100 Share Warren Buffett Loves" is an exclusive Fool report that names the British blue-chip the legendary billionaire investor is backing today, and the investing logic behind his purchase.

You can discover the potential winner Mr Buffett favours right now by clicking here to download this free report while it remains available.

> Sonia does not own any share mentioned in this article.

Share & subscribe

Comments

The opinions expressed here are those of the individual writers and are not representative of The Motley Fool. If you spot any comments that are unsuitable hit the flag to alert our moderators.

 

There are no comments yet - why not be the first?

Join the conversation

Please take note - some tags have changed.

Line breaks are converted automatically.

You may use the following tags in your post: [b]bolded text[/b], [i]italicised text[/i]. All other tags will be removed from your post.

If you want to add a link, please ensure you type it as http://www.fool.co.uk as opposed to www.fool.co.uk.

Hello stranger

To add your own comment, please login.

Not yet registered? Register now.