By John Letzing
ZURICH-- Novartis AG said on Tuesday its second-quarter profit
fell 32% from the same period last year, as the Swiss drug giant
was hit by a strengthened dollar and a weak result from its
eye-care treatment business.
Basel-based Novartis said net income fell to $1.86 billion, or
$0.77 per share in the quarter ended in June, compared with $2.72
billion a year earlier.
Core net income, which strips out one-time events such as
impairments or gains, fell 8% to $3.07 billion, Novartis said.
Analysts had expected $3.12 billion.
Novartis has been affected by more volatile currency markets
this year, in particular by a strengthening of the U.S. dollar--the
currency in which the company reports its results. On Tuesday, the
company said net sales fell to $12.7 billion, from $13.3 billion.
On a constant currency basis, or stripping out the impact of
currency fluctuation, net sales rose 6%. The company's core
operating income margin, on a constant currency basis, increased
0.3%.
Novartis confirmed its outlook for the full year, with net sales
expected to grow in the mid-single digits, while core operating
income is expected to grow at a faster, high-single-digit rate.
Novartis Chief Executive Joseph Jimenez told reporters that the
quarterly results were "strong." Mr. Jimenez said the quarter was a
particularly good one for innovation, and cited the U.S. approval
and launch of drugs including heart-failure treatment Entresto.
Novartis's Alcon eye-care treatment business, however, posted
disappointing numbers. The unit suffered during the quarter due to
increased competition and "a slowdown in emerging markets," Mr.
Jimenez said. Alcon net sales fell 9% in the quarter and were flat
on a constant currency basis. "We're not happy with that," Mr.
Jimenez said.
Novartis's Sandoz generics unit was a bright spot, Mr. Jimenez
said, with net sales down 2%, but up 11% on a constant currency
basis.
The company's most recent results come after it completed a
series of transactions designed to refocus the firm on three areas:
pharmaceuticals, generics and eye care. Last year, Novartis and
GlaxoSmithKline PLC said they would complete a series of deals
valued at more than $20 billion, aimed at helping both firms narrow
their respective focus.
For Novartis, the deals included acquiring Glaxo's oncology
unit, to bolster the Swiss firm's lineup of cancer products, while
Glaxo bought Novartis's vaccines business. Separately, Novartis
sold its animal-health business to Eli Lilly & Co. for roughly
$5.4 billion.
Write to John Letzing at john.letzing@wsj.com
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