Novo Nordisk Beats Expectations on Strong Sales
Operating profit at Denmark's Novo Nordisk slipped 2 percent last year but still beat analysts' expectations due to strong sales growth in the US and China, company CEO Lars Rebien told "Worldwide Exchange" on Thursday.
The world's biggest maker of insulin said earnings before interest and taxes fell to 8.9 billion crowns ($1.77 billion) from 9.1 billion a year earlier, but topped a mean estimate of 8.8 billion in a Reuters poll of analysts.
Novo said operating profit was impacted by non-recurring costs of 1.3 billion crowns related to the discontinuation of inhaled insulin project AERx. Adjusted for this and the impact from currencies, underlying operating profit rose by close to 25 percent to 10.3 billion crowns, it said.
"The results are really strong, but the share also rose yesterday on expectations the results would be solid, so we've already seen some of that effect," said Dansk Aktie Analyse analyst Michael Bjergby.
Novo Chief Executive Lars Sorensen said 2007 results were driven by robust sales growth in all major markets and the group's portfolio of modern genetically improved insulins and gross margin improvement.
"This makes us confident that we will also be able to deliver solid underlying growth in 2008," he said in a statement.
The strong sales in insulin are underpinned by the deepening problem of obesity, Sorensen told CNBC Europe, adding that the fast developing nations of China and India provided major growth opportunities.
"As (India and China) are able to extend their healthcare provisions throughout these vast countries, more and more people are being diagnosed and treated and that leads to big growth opportunities for our company," Sorensen said.
Sales rose 8 percent to 41.8 billion crowns against the mean in the Reuters poll of 42.0 billion crowns.
Novo said all regions realized solid growth rates, with North America and Europe as the primary contributors.
The group said 2008 operating profit was expected to grow by at least 25 percent, with sales growing about 6.5 percent.
Sales of what the group calls modern insulins, which are insulin analogues with modified characteristics, rose 29 percent to 14 billion crowns while sales of human insulin fell 7 percent to 12.6 billion crowns. Sales of anti-bleeding drug NovoSeven rose 4 percent to 5.9 billion crowns.
Novo said it retained its position as global leader with 53 percent of the total insulin market and 43 percent of the modern insulin market, both measured by volume.
The group proposed a dividend of 4.50 crowns per share for 2007.
Novo shares ended 1.5 percent higher.