UCB Earnings Fall but Guides Up

Zacks Equity Research
August 3, 2012

UCB SA (UCBJY) posted first-half 2012 adjusted earnings of €1.09 (approx. $1.40) per share, down 25% from the year-ago earnings. The decline in earnings was attributable to higher operating expenses.

Half-yearly sales increased 2% on a reported basis and decreased 2% at constant exchange rates (:CER).

Revenues primarily comprise of sales of Cimzia, Vimpat, Neupro and Keppra.

Cimzia (Crohn’s disease and rheumatoid arthritis) sales went up 46% to €209 million during the period, and Vimpat (epilepsy) sales came in at €150 million, reflecting an increase of 54%. Neupro, which is marketed as a treatment for Parkinson’s disease and restless legs syndrome, recorded sales of €54 million, up 20% from the year-ago sales. Neupro was launched in the US for the aforementioned indications in July 2012.

However, sales of Keppra, another epilepsy treatment, declined 12% to €445 million in the first half of 2012. Sales were hurt by generic competition primarily in North America and Europe. Despite the decline, the drug accounted for 26% of the total revenues recorded by UCB in the first half of 2012.

The combined sales of the other three drugs – Cimzia, Vimpat and Neupro – accounted for about 24% of total revenue in the first half of 2012.

Outlook for 2012

The company expects 2012 adjusted earnings per share to be approximately €1.70 (previous guidance: €1.60 to €1.70 per share), on revenues of €3.2 billion (previous guidance: €3.1 billion). UCB expects Cimzia, Vimpat and Neupro to continue performing strongly throughout 2012. Robust sales of the drugs are expected to drive earnings.

We currently have a Zacks #3 Rank (short-term Hold rating) on the stock.

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