LONDON, UK / ACCESSWIRE / July 20, 2018 / If you want access to our free earnings report on Novartis AG (NYSE: NVS), all you need to do is sign up now by clicking the following link www.active-investors.com/registration-sg/?symbol=NVS. The Company reported its second quarter fiscal 2018 operating and financial results on July 18, 2018. The drug-maker outperformed top- and bottom-line expectations. Register today and get access to over 1,000 Free Research Reports by joining our site below:
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Earnings Highlights and Summary
For the second quarter of the fiscal year 2018, Novartis’ net sales were $13.2 billion, up 7% compared to $12.2 billion in Q2 2017, driven by volume growth, mainly in Innovative Medicines. The Company’s revenue numbers beat analysts’ estimates by $220 million.
During Q2 2018, Novartis reported an operating income of $2.5 billion, up 9% compared to $2.3 billion in Q2 2017, primarily driven by higher sales and an improved gross margin. The Company’s core operating income was $3.5 billion in the reported quarter, up 9% on a y-o-y basis, driven by higher sales and an improved gross margin.
For Q2 2018, Novartis posted a net income of $7.8 billion, or $3.34 per share, compared to $2.0 billion, or $0.84 per share, in Q2 2017, with the results for the reported quarter benefiting from a $5.7 billion net gain recognized from the sale of its stake in the GSK consumer healthcare joint venture.
Novartis’ core net income was $3.0 billion, or $1.29 per diluted share, in Q2 2018 compared to $2.9 billion, or $1.22 per diluted share in Q2 2017. The Company’s earnings numbers beat Wall Street’s estimates of $1.27 per share.
During Q2 2018, Novartis’ Innovative Medicines segment’s net sales jumped 10% to $8.9 billion on a y-o-y basis. The segment’s volume contributed 12% to sales growth, while generic competition had a negative impact of 3%, primarily due to Gleevec/Glivec in the US and Europe and certain Ophthalmology products. The segment’s operating income advanced 11% to $2.3 billion on a y-o-y basis in Q2 2018, mainly driven by higher sales and an improved gross margin. The segment’s core operating income was $2.9 billion, up 14% on a y-o-y basis.
For Q2 2018, Novartis’ Sandoz segment’s net sales remained flat at $2.5 billion on a y-o-y basis, as a price erosion of 9%, mainly in the US, was largely offset by a volume growth of 7%. Excluding the US, the segment’s net sales grew by 5% on a y-o-y basis. During the reported quarter, the Sandoz segment’s operating income was $328 million, primarily due to lower sales and higher ex-US M&S investments, partly offset by a legal settlement gain. The segment’s core operating income was $480 million in Q2 2018, down 3% on a y-o-y basis.
Novartis’ Alcon segment’s net sales were $1.8 billion in Q2 2018, up 7% on a y-o-y basis. The Alcon segment’s results reflected the sixth consecutive quarter of net sales growth as a result of improved operations, innovation, and customer relationships. The segment’s operating income was $65 million in the reported quarter compared to $29 million in the prior year’s same quarter, mainly driven by higher sales and an improved gross margin. The segment’s core operating income was $338 million, up 16% on a y-o-y basis.
Novartis’ free cash flow amounted to $3.6 billion in Q2 2018, up 10% compared to $3.2 billion in Q2 2017, driven by higher cash flows from operating activities. During H1 2018, the Company repurchased 9.2 million shares for $0.7 billion to mitigate dilution related to participation plans of associates. On June 29, 2018, Novartis announced a new up-to $5 billion share buyback to be executed by the end of 2019 on the second trading line.
As of June 30, 2018, the Company’s net debt increased by $0.2 billion to $19.2 billion versus December 31, 2017; mainly driven by the annual dividend payment of $7.0 billion, the acquisition of Advanced Accelerator Applications S.A. in Q1 2018 and of AveXis, Inc. in Q2 2018, and mostly offset by the inflow from the sale of the stake in the GSK consumer healthcare joint venture and $5.5 billion free cash flow in H1 2018.
For FY18, Novartis is forecasting group net sales to grow in the low- to mid-single digit. The Company’s group core operating income is expected to grow in the mid- to high-single digit for FY18.
Stock Performance Snapshot
July 19, 2018 - At Thursday’s closing bell, Novartis’ stock slightly fell 0.20%, ending the trading session at $80.80.
Volume traded for the day: 3.76 million shares, which was above the 3-month average volume of 1.76 million shares.
Stock performance in the last month – up 9.83%; and previous three-month period – up 2.28%
After yesterday’s close, Novartis’ market cap was at $199.29 billion.
Price to Earnings (P/E) ratio was at 23.83.
The stock has a dividend yield of 3.69%.
The stock is part of the Healthcare sector, categorized under the Drug Manufacturers - Major industry.
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