Novo Nordisk AS reported results for the third quarter on Friday. Here’s what we watched:
SALES FORECAST: Sales rose 9.1% to 30.28 billion Danish kroner ($4.52 billion) against analysts’ expectations of DKK30.39 billion, on strong growth for its diabetes and obesity treatments.
NET PROFIT FORECAST: Net profit for the three months ended September 30 rose to DKK10.19 billion from DKK9.04 billion a year earlier, beating the DKK9.86 billion forecast by analysts in a FactSet poll.
WHAT WE WATCHED:
GLUCAGON-LIKE PEPTIDE-1: Sales of Novo Nordisk’s Ozempic glucagon-like peptide-1 drug, or GLP-1, totaled DKK6.87 billion in the first 9 months of the year, “and Ozempic thereby reached blockbuster status.” the company said. The drug is designed to respond when blood sugar rises and helps the body release its own insulin. Ozempic has now been launched in 24 countries. In the U.S., the new-to-brand prescription market share for Ozempic is now 37%, bringing Novo Nordisk’s combined GLP-1 new-to-brand prescription market share to 54%.
MARGINS: The gross margin was 83.2% in the third quarter of 2019 compared with 84.1% in the same period last year. The decline of 0.9 percentage point of the gross margin reflects a negative impact from lower realized prices in the U.S. and impairment of intangible assets, partly countered by a positive product mix and a positive currency impact of 0.4 percentage point. The operating margin was virutally unchanged at 42.7% from 42.6% in the quarter. Sybank had expected an EBIT margin of 43.8%.
GUIDANCE: For 2019, sales growth measured in local currencies is now seen at 5% to 6%, from an earlier estimate of 4% to 6%, but reported growth is still forecast to be around three percentage points higher. Operating profit growth is still expected to be 4% to 6% in local currencies, with reported figures still expected to be around five percentage points higher. However, the company said it now sees free cash flow this year at DKK31 billion to DKK35 billion, from DKK30 billion-DKK34 billion previously. Depreciation, amortization and impairment losses are seen DKK1 billion above its previous guidance at DKK5.5 billion, reflecting increased impairment of intangible assets.
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