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AstraZeneca threatens ax
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August 3, 1999: 5:35 a.m. ET
Maiden first-half earnings rise 6%; US agrochemicals hold back growth
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LONDON (CNNfn) - AstraZeneca is likely to take an ax to its underperforming U.S. operations, following its first earnings announcement since the merger which created the Anglo-Swedish healthcare giant.
First-half pretax profit before one-time items came in at $2.06 billion, up 6 percent from the same period last year. But it was near the bottom of the range of analysts' forecasts. AstraZeneca was formed from a merger of Britain's Zeneca and Sweden's Astra which was completed in April.
Profits were held back by a poor showing at the agrochemicals and Salick cancer care units in the United States. AstraZeneca management warned that strategic options for these businesses would be carefully evaluated, and "some restructuring is expected before the year end."
Commodity prices, the lowest in a decade, are hammering the U.S. agrochemicals business, and Astra warned that a further tightening of regulations in the cancer care industry would hurt (already depressed) profitability in the unit.
Astra has recouped some $2.1 billion following the sale of its specialty chemicals unit to a management buyout. The company has a cash pile of $1.8 billion, and calculates it should have at least $2 billion available for share repurchases.
The healthcare operations returned the strongest growth of the company's activities, with sales rising 16 percent and operating profit increasing 13 percent. AstraZeneca makes Losec, the world's biggest treatment for ulcers.
Total group revenue reached $9.04 billion (up from $8.10 billion) and earnings per share were $0.83, an 11 percent increase on the $0.75 earned last year.
The company predicted that despite the tough conditions in agrochemicals and cancer care, its revenue should grow by more than 10 percent for the full financial year.
AstraZeneca shares dipped more than 1 percent in early London trading, to 2,293 pence.
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AstraZeneca
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