Are Shire's (SHP) third-quarter woes behind it? The market was previously disappointed when earnings suffered as a result of lower sales from the pharma group's haemophilia division. But chief financial officer Jeff Poulton says this was down to timing issues with customers outside of the US, which make larger but altogether less frequent orders. Thankfully, the final quarter has put these fears to rest, as order patterns normalised and growth on this front resumed. For the year as a whole, haemophilia sales grew by 3 per cent, in line with the market.
Overall, investors seemed pretty pleased with Shire's annual numbers, sending the shares up 4 per cent by way of response. Product sales grew by a whopping 78 per cent last year - largely the result of including sales from recently acquired Baxalta - but even 'legacy' Shire products grew sales by 15 per cent to nearly $7bn (£5.6bn). During the fourth quarter, total product sales leapt by 123 per cent, while Shire product revenues rose 13 per cent to $1.8bn. Ignoring the contribution from Baxalta, sales benefited from strong growth across all franchises, but specifically genetic diseases and internal medicine, both of which grew by 17 per cent. Ophthalmology also contributed $40m to sales, thanks to new dry-eye treatment Xiidra, which has captured nearly a fifth of the market during the first four months of launch.
It's fair to say 2016 was a transformational year for Shire following the Baxalta deal, cost synergies from which are ahead of schedule. Chief executive Flemming Ornskov said the priority was bringing debt levels down to around two or three times cash profit, from just shy of five times at the year-end, while future large-scale M&A remains off the table for now. In the meantime, Mr Ornskov is touting a possible product launch this year for SHP465, a product designed to treat ADHD in adults; a decision from US regulators is due in June.
Prior to these results, analysts at Liberum expected core EPS of 495¢ for the year ending December 2017, moving up to 543¢ in FY2018.
| SHIRE (SHP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 4,716p | MARKET VALUE: | £42.7bn | |
| TOUCH: | 4,715-4,719p | 12-MONTH HIGH: | 5,377p | LOW: 3,511p |
| DIVIDEND YIELD: | 0.5% | PE RATIO: | 75 | |
| NET ASSET VALUE: | 3,200¢* | NET DEBT: | 78% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (ȼ) | Dividend per share (ȼ) |
|---|---|---|---|---|
| 2012 | 4.5 | 1.01 | 145 | 17.30 |
| 2013 | 4.9 | 1.69 | 257 | 19.93 |
| 2014 | 6.0 | 3.34 | 560 | 22.92 |
| 2015 | 6.4 | 1.39 | 227 | 26.37 |
| 2016 | 11.4 | 0.49 | 78 | 30.33 |
| % change | +78 | -65 | -66 | +15 |
Ex-div: 9 Mar Payment: 25 Apr *Includes intangible assets of $52.6bn, or 5,813¢ a share £1=$1.24 | ||||
