Roche Falls After Full-Year Profit Misses Analyst Estimatesby
Swiss drugmaker blames increased tax rate of almost 27 percent
Roche sees 2016 sales having low- to mid-single digit growth
Roche Holding AG declined the most in more than five months after Europe’s largest drugmaker reported full-year profit that missed analyst estimates.
Earnings excluding some items fell to 13.49 Swiss francs a share for the year from 14.29 francs in 2014, the Basel, Switzerland-based company said in a statement on Thursday. Analysts expected 14.01 francs a share, the average of 26 estimates compiled by Bloomberg. Roche doesn’t report quarterly profit figures.
The company blamed higher taxes, saying its effective core tax rate had increased to almost 27 percent last year from 24 percent in 2014 as it derived more earnings from countries with higher levies, such as the U.S.
Roche declined 4.2 percent to 257.10 francs at 11:27 a.m. in Swiss trading.
Sales increased 1 percent to 48.1 billion francs ($47.3 billion) as demand for its new breast-cancer drugs Perjeta and Kadcyla continued to grow, Roche said. That compared with the 48 billion-franc average of 15 analysts’ estimates compiled by Bloomberg.
The drugmaker forecast that sales will have low- to mid-single digit growth in 2016 on a constant-exchange rate basis, while core EPS would grow at a faster rate. Its cross-town neighbor Novartis AG yesterday projected that its own sales and earnings would likely remain unchanged this year.
Roche gave the same guidance it has given in each of the past two years, and the profit forecast is below market expectations when considering currency effects, said Tim Anderson, an analyst with Sanford C. Bernstein & Co. who has an "outperform" rating on the stock.
Roche plans to submit the experimental medicine ocrelizumab to regulators this year as a treatment for forms of multiple sclerosis known as relapsing and primary progressive. The drug may garner revenue of 2.5 billion francs by 2020, according to estimates compiled by Bloomberg. The company also completed a filing for atezolizumab this month, seeking U.S. regulatory approval to sell the drug for bladder cancer that has spread.
Full-year revenue from the breast-cancer drugs Herceptin, Perjeta and Kadcyla rose 19 percent combined, Roche said. For the quarter, the sales figures were:
- Herceptin: 1.66 billion francs
- Perjeta: 410 million francs
- Kadcyla: 211 million francs
Roche prefers to lean on research and development to grow the business, rather than pursue large acquisitions, Chief Executive Officer Severin Schwan said. The company will continue to seek out smaller deals in diagnostics.
Roche also plans to further increase its dividend in francs.
Core earnings per share, a profit measure that Roche provides saying it better reflects the company’s underlying performance, excludes restructuring plans, discontinued operations, legal expenses, goodwill impairment as well as some costs and the one-time boost from the sale of rights to the medicine filgrastim in 2014.