AstraZeneca profit falls as costs and writedowns increase
AstraZeneca's annual profit fell 14% as rising costs and higher asset writedowns offset sales increases at the pharmaceutical company.
Operating profit for the year to the end of December declined to $2.9bn (£2.2bn) from $3.4bn a year earlier as revenue rose 10% to $24.4bn. Excluding currency changes, operating profit dropped 16% and sales increased 13%.
Pretax profit fell to $1.55bn from $1.99bn. The company's core earnings per share meanwhile rose 1% to $3.50.
The final quarter showed a deterioration in performance as revenue unadjusted for currency changes rose 4% to $6.7bn and operating profit fell 46% to $577m. Core earnings dropped 44% to 89 cents a share.
AstraZeneca shares fell 1.6% to 7,485p at 09:22 GMT.
The FTSE 100 company said it expected 2020 revenue to rise by a percentage in the high single digits or low double digits and for core earnings to improve by a mid-to-high teens percentage. The guidance assumes a few months of impact from the coronavirus outbreak.
Product sales rose 12% to $23.6bn as the company sold new medicines and business grew in emerging markets. Operating costs increased 11% to $18.1bn as AstraZeneca wrote down the value of more intangible assets and spent extra money launching new medicines and in emerging markets.
Pascal Sorio, AstraZeneca's chief executive, said: "In the first full year of our return to growth, we made good progress in line with our strategy. Results from our new medicines and emerging markets accompanied positive news for patients, most recently including regulatory approvals of Enhertu in breast cancer and Calquence in leukaemia … 2020 is anticipated to be another year of progress for AstraZeneca. We are becoming a better-balanced business, both regionally and through our medicines."
Shore Capital analysts Adam Barker and Tara Raveendran said the results fell short of expectations on a number of points. Core earnings were 2% below consensus because of higher investment spending and sales of major drugs such as cancer treatments Tagrisso and Lynparza were lower than expected.
"Given the broad-based miss of key on-market assets and Core earnings per share today’s results are likely to be viewed negatively. We also believe management guidance will disappoint albeit we would flag that AstraZeneca has attempted to quantify the impact of COVID-19 [coronavirus] in its guidance with other large pharma excluding this impact."
AstraZeneca returned to growth in 2018 for the first time since 2014 when it fought off a hostile takeover bid from Pfizer. The Anglo-Swedish company increased its sales guidance twice last year as new medicines for cancer, heart disease and diabetes took off.