Novartis Stock Down On Weak Q4 Results; Sees Growth In FY23

(RTTNews) - Shares of Novartis AG were losing around 2 percent in the early morning trading in Switzerland after the drug major reported Wednesday sharply lower profit in its fourth quarter with weak sales as well as the absence of prior year's hefty Roche income. Adjusted earnings, however, topped market estimates, while top line missed their view.

Further, the company announced higher dividend, and said it sees growth in fiscal 2023 sales and core operating income.

Vas Narasimhan, CEO of Novartis, said, "Our six multi-billion brands now represent 32 percent of our Innovative Medicines sales and are growing 26 percent. …. Looking ahead, we have a catalyst rich pipeline with 15 pivotal readouts in the mid-term. We expect to continue to deliver improved financials and strengthen Novartis ESG foundations...."

Regarding the planned Sandoz spin-off, Novartis said the plan remains on track for the second half. Completion of the transaction is subject to certain conditions. The deal is expected to be tax neutral to Novartis.

For fiscal 2023, the company expects sales to grow in low-to-mid single digit and core operating income in mid single digit, assuming Sandoz would remain within the Group for the entire year.

Excluding Sandoz, the company's sales would grow low-to-mid single digit and core operating income would grow mid-to-high single digit.

In fiscal 2022, the company's sales were $50.55 billion and core operating income was $16.67 billion.

Further, Novartis Board of Directors proposed a dividend payment of 3.20 Swiss francs per share for 2022, up 3.2 percent from the prior year. Shareholders will vote on this proposal at the Annual General Meeting on March 7.

In the fourth quarter, net income declined 91 percent to $1.47 billion from last year's $16.31 billion. Earnings per share were $0.69, down from $7.29 a year ago.

The profit drop reflects the absence of prior year's Roche income of $14.6 billion. Excluding the impact of Roche income, net income grew 2 percent at constant currencies.

Core net income was $3.25 billion or $1.52 per share, compared to $3.14 billion or $1.40 per share last year.

On average, five analysts polled by Thomson Reuters expected earnings of $1.44 per share for the quarter. Analysts' estimates typically exclude special items.

Core operating income increased 6 percent to $4.03 billion from prior year's $3.82 billion driven by higher sales and productivity.

Net sales were $12.69 billion, down 4 percent from last year's $13.23 billion. Sales grew 3 percent in constant currencies. Analysts expected sales of $13.13 billion for the quarter.

The sales reflected volume growth of 10 percentage points, as well as price erosion and the negative impact from generic competition.

Innovative Medicines net sales were $10.4 billion, a growth of 3 percent, with higher volume mainly driven by continued strong performance from Entresto, Kesimpta, Pluvicto and Kisqali.

Sandoz net sales were $2.3 billion, down 8 percent.

In Switzerland, Novartis shares were trading at 81.25 Swiss francs, down 1.5 percent.

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