The market was clearly pleased to see gathering momentum in product sales between the third quarter and the end of the year for pharma giant AstraZeneca (AZN). New drug launches coupled with strong growth across emerging markets – sales in China rose by more than a quarter – helped to mitigate an overall decline in total revenue. Indeed, even adjusted EPS of $3.46 (£2.70) beat consensus expectations of $3.35, though it still represents a 19 per cent fall year-on-year.
It marks a year where much of what chief executive Pascal Soriot had promised has come to fruition. But is it enough to justify the premium demanded by the shares? Of the 4 per cent rise in product sales to $21bn, only $2.8bn came from new medicines, while externalisation revenues – that is, money earned from joint ventures and partnerships – halved to $1bn, reflecting the non-repetition of $997m recognised in FY 2017 as part of the collaboration with US group Merck (US:MRK) on cancer drug Lynparza. That put downward pressure on gross margins, which fell from 80 per cent to 77 per cent – also the result of higher restructuring charges and manufacturing variances in 2017.
| ASTRAZENECA (AZN) | ||||
| ORD PRICE: | 6,018p | MARKET VALUE: | £76.3bn | |
| TOUCH: | 6,017-6,018p | 12-MONTH HIGH: | 6,432p | LOW: 4,699p |
| DIVIDEND YIELD: | 3.6% | PE RATIO: | 45 | |
| NET ASSET VALUE: | 984¢* | NET DEBT: | 93% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (p)** |
| 2014 | 26.1 | 1.20 | 98 | 178 |
| 2015 | 24.7 | 3.10 | 223 | 189 |
| 2016 | 23.0 | 3.55 | 277 | 219 |
| 2017 | 22.5 | 2.23 | 237 | 203 |
| 2018 | 22.1 | 1.99 | 170 | 215 |
| % change | -2 | -11 | -28 | +6 |
| Ex-div: | 28 Feb | |||
| Payment: | 27 Mar | |||
| *Includes intangible assets of $33.7bn or 2,656¢ a share | ||||
| **Declared in US$ and maintained at 280¢ since 2016 £1=$1.28 | ||||
