Novartis AG, the world’s biggest drugmaker by sales, reported a 7 percent decline in second-quarter earnings after the strength of the U.S. dollar eroded sales.
Core operating income in U.S. dollar terms fell to $3.59 billion, Basel, Switzerland-based Novartis said in a statement Tuesday. That was in line with the $3.58 billion average of 11 estimates compiled by Bloomberg. The company lowered the forecast for its Alcon eye-care unit, and raised the guidance for its Sandoz generics business.
Currency fluctuations stripped 0.9 percentage points from the profit margin, undermining Chief Executive Officer Joe Jimenez’s efforts to increase profitability after wrapping up a $30 billion reshaping of the company. Novartis in March completed offloading its slow-growing animal health business and acquired GlaxoSmithKline Plc’s portfolio of cancer drugs.
“Overall not a great performance this quarter,” Michael Leuchten, an analyst at Barclays Plc, wrote in a note to clients titled “Sandoz giveth, Alcon taketh away.” The second-quarter results were “more messy than usual” with gains in the generics unit being insufficient to compensate for weakness in Alcon, he said.
Novartis reiterated its full-year forecast for core operating income to grow by a high-single digit percentage and sales to expand at a mid-single digit rate, excluding currency fluctuations.
Shares of Novartis have gained 32 percent in the past 12 months, compared with a 14 percent advance for Switzerland’s benchmark SMI Index.
Net sales in the company’s pharmaceutical division fell 4 percent to $7.8 billion in U.S. dollar terms, and rose 6 percent when excluding currency fluctuations.
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