NVS Novartis AG

By John Letzing and Denise Roland 

ZURICH-- Novartis AG said it would revamp its ailing eye-care unit and has replaced its head after the Swiss drugs giant reported a 57% drop in net profit for the fourth quarter as the business dragged on its results.

Basel-based Novartis said on Wednesday that net income fell to roughly $1.05 billion in the quarter ended in December, compared with about $2.45 billion in the same period a year earlier.

Revenue dipped 4% to roughly $12.52 billion, the company said. Core net income, which strips out one-time events such as impairments or gains, fell 5% to $2.7 billion, Novartis said.

Analysts had expected revenue of $12.7 billion and core net income of $2.7 billion.

Novartis cited a "weak" performance by its Alcon eye-care unit in the period.

The company said it has replaced the head of Alcon, by hiring Mike Ball to step in for Jeff George, who is leaving Novartis. Mr. Ball is the former chief executive of Hospira.

Mr. George "had a very difficult year at Alcon, obviously," Novartis Chief Executive Joseph Jimenez said during a conference call with reporters.

Mr. Jimenez said that Novartis will narrow Alcon's focus to its surgical and vision-care businesses, and increase investment in contact lenses, while transferring the unit's pharmaceuticals products to Novartis's pharmaceuticals division.

Mr. Jimenez said Novartis will invest about $200 million in a plan that should boost Alcon's performance, and that he expects the unit will begin to "return to growth by the end of this year."

In addition, Novartis said it would take steps, including centralizing manufacturing to reduce costs by $1 billion annually by 2020. The effort will involve one-time restructuring costs of about $1.4 billion spread over five years, Novartis said.

For 2016, Mr. Jimenez said Novartis expects revenue and net profit to be "broadly in line" with results in 2015.

Write to John Letzing at john.letzing@wsj.com and Denise Roland at Denise.Roland@wsj.com

(END) Dow Jones Newswires

January 27, 2016 02:46 ET (07:46 GMT)

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