Novartis Q4 Profit Rises, But Results Miss View

Novartis AG (NVS) reported that its fourth-quarter net income was $2.1 billion, up 86% from last year, driven by higher operating income and benefiting from lower taxes. Quarterly net income was up 93% at constant currencies basis. Earnings per share for the fourth-quarter were $0.92 up 84% or 93% at constant currencies basis, from the prior year.

At constant currencies basis, the company expects net sales to grow low to mid single digit; core operating income to grow mid single digit, ahead of sales for fiscal year 2021.

Operating income for the fourth-quarter was $2.6 billion, up 45% or 51% at constant currencies basis from the previous year, mainly due to lower impairments, lower legal charges and income from contingent receivables.

Core earnings per share was $1.34 up 2% or 3% at constant currencies basis from the previous year. Analysts polled by Thomson Reuters expected the company to report earnings of $1.36 per share for the fourth-quarter. Analysts’ estimates typically exclude special items.

Net sales were $12.77 billion up 3% or 1% at constant currencies basis from the previous year, driven by volume growth of 6 percentage points, offset by price erosion of 2 percentage points and the negative impact from generic competition of 3 percentage points. Analysts expected revenues of $12.87 billion for the quarter.

The company’s board has proposed a dividend payment of 3.00 Swiss francs per share for 2020, up 1.7% from 2.95 francs per share in the prior year.

The company’s board has proposed that shareholders authorize the Board of Directors to repurchase shares up to a maximum of 10 billion francs between the annual general meeting 2021 and the annual general meeting 2024.

The Novartis Board of Directors proposes the re-election of Patrice Bula, Bridgette Heller, Enrico Vanni, and William Winters and the election of Simon Moroney as members of the Compensation Committee. The Board of Directors intends to designate Simon Moroney as Chairman of the Compensation Committee.

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