1st Quarter Results - Part 1

AstraZeneca PLC 3 May 2000 PART ONE AstraZeneca PLC First Quarter Results 2000 '15 per cent profits growth: performance on track' Financial Highlights (before Exceptional Items) --------------------------------------------------------------------------- ----------------------------------------- Group 1st Quarter 1st Quarter Constant (inc Agrochemicals) 2000 1999* Currency USDm USDm % ----------------------------------------- Sales 4,598 4,314 +10 Operating Profit 1,077 948 +15 Profit before Tax 1,118 971 +17 Earnings per Share Group USD0.44 USD0.39 +14 Group (Statutory FRS3) USD0.41 USD0.40 ----------------------------------------- * Excluding Specialties All narrative in this section refers to growth rates at constant exchange rates - Sales up 10 per cent; Agrochemicals sales up 12 per cent - Operating profit up 15 per cent; Agrochemicals operating profit up 30 per cent - Profit before Tax of USD1,118 million, up 17 per cent - EPS up 14 per cent - Strength of US Dollar versus Euro reduced reported sales by 3 per cent and operating profit by 1 per cent ----------------------------------------- Ongoing 1st Quarter 1st Quarter Constant (excl Agrochemicals) 2000 1999 Currency USDm USDm % ----------------------------------------- Sales 3,892 3,651 +10 Operating Profit 976 877 +14 Earnings per Share USD0.41 USD0.36 +17 ----------------------------------------- All narrative in this section refers to growth rates for ongoing operations at constant exchange rates - Sales up 10 per cent; US Healthcare sales up 16 per cent - Operating profit up 14 per cent - EPS up 17 per cent - Healthcare operating margin increased to 25.5 per cent - Strength of US Dollar versus Euro reduced reported sales and operating profit by 3 per cent - Synergy benefits of USD120 million achieved in the quarter; exceptional charge of USD83 million related to the ongoing integration and synergy programmes Tom McKillop, Chief Executive Officer, said: 'The year has started encouragingly. Our Healthcare business achieved record profits and it is pleasing to see a positive start for Agrochemicals, although it is still too early in the season to predict the outcome for the year. 'The strengthening of the dollar, particularly against the Euro, reduced reported sales and profits for our ongoing operations by three per cent and this trend is expected to continue throughout the rest of the year. These first quarter results in Healthcare were also adversely affected by some USD70 million of sales late last year in anticipation of Year 2000 effects. '2000 will be a very important year for AstraZeneca. The Group restructuring should be completed with the formation of Syngenta, anticipated during the second half of the year. Within Healthcare we are on track to meet our milestones with new product development and launches. In March Nexium, our next generation Proton Pump Inhibitor (PPI), received its first approval in Sweden ahead of expectations: a number of major European launches will follow during the second half of the year. This together with further launches across the product range and a build-up in development activities will weight costs more to the second half. The quarterly pattern of sales growth is also anticipated to be stronger in the later part of the year. 'On a constant exchange rate basis, we remain on track to achieve the financial targets announced at the Annual Results presentation in February.' London, 3 May 2000 Media Enquiries: Steve Brown/Lucy Williams (London) (020) 7304 5033/5034 Mikael Widell (London) (020) 7304 5030 Staffan Ternby (Sodertalje) (8) 553 26107 Rachel Bloom (Wilmington) (302) 886 7858 Analyst/Investor Enquiries: Elizabeth Sutton/Michael Olsson (London) (020) 7304 5101/5087 Staffan Ternby (Sodertalje) (8) 553 26107 Ed Seage (Wilmington) (302) 886 4065 Jorgen Winroth (Wayne) (609) 896 4148 Healthcare --------------------------------------------------------------------------- Growth rates are at constant exchange rates (CER). ----------------------------------------- First Quarter ----------------------------------------- 2000 1999 CER % ----------------------------------------- Sales 3,861 3,630 + 9 Sales (ex Losec/Prilosec) 2,273 2,216 + 6 Operating Profit 985 880 +15 ROS 25.5 24.2 n/m ----------------------------------------- Gastrointestinal ----------------------------------------- First Quarter ----------------------------------------- 2000 1999 CER % ----------------------------------------- Losec/Prilosec 1,588 1,414 +15 ----------------------------------------- Total 1,599 1,426 +15 ----------------------------------------- - Continued strong growth for Prilosec in the USA with annualised prescription market share at 32.4 per cent at the end of March - PPI share of US anti-secretory market continuing to expand (57 per cent at the end of March) - Losec sales in France remained strong: NSAID indication now contributes to around a third of total prescriptions. Sales also benefited from the recommendation by opinion leaders that PPIs should be used as first line treatment for GERD - Sales in Germany and the UK for Losec were adversely affected by generic and class competition respectively - The first approval for Nexium was received in Sweden. Launches across Europe will start in the second half of the year with the US launch expected early in 2001 Cardiovascular ----------------------------------------- First Quarter ----------------------------------------- 2000 1999 CER % ----------------------------------------- Zestril 276 301 - 5 Atacand 56 32 +84 Seloken/Toprol-XL 106 112 - 1 Plendil 115 108 +10 ----------------------------------------- Total 794 815 + 1 ----------------------------------------- - Sales in Cardiovascular were affected by phasing associated with Y2K and long-term contracts - Zestril US sales up four per cent versus the fourth quarter last year. Sales phasing in 1999, heavily weighted to the first quarter, created adverse variance - Atacand sales grew strongly in all markets. Scheduled launches of Atacand Plus during the second quarter in some major European markets will stimulate further growth - Toprol-XL US market share continued to grow but sales were lower reflecting Y2K stocking effect Respiratory ----------------------------------------- First Quarter ----------------------------------------- 2000 1999 CER % ----------------------------------------- Pulmicort 174 190 - 1 Accolate 55 28 +100 Rhinocort 41 43 - Oxis 27 20 +45 ----------------------------------------- Total 345 336 + 9 ----------------------------------------- - Pulmicort sales down one per cent due to highly competitive European market. Sales in the USA were up 33 per cent with some promotion of the product now possible as supply problems ease - Strong sales of Accolate in the USA mainly due to wholesaler buying - Sales of Rhinocort Aqua, launched in the US in February, going well supported by a major DTC campaign. At the end of March, just eight weeks after launch, a 3.0 per cent market share had been achieved of the aqueous nasal inhaler market. This success is masked by the comparison with a particularly strong first quarter in 1999 Oncology ----------------------------------------- First Quarter ----------------------------------------- 2000 1999 CER % ----------------------------------------- Casodex 115 91 +29 Arimidex 37 27 +44 Nolvadex 139 143 - 4 Zoladex 167 165 + 3 ----------------------------------------- Total 465 433 + 9 ----------------------------------------- - Casodex sales growth continued across all markets, consolidating further its leadership position and with notable market share gains in Japan (nearly a third of all anti-androgen prescriptions) and France (now the market leader). Sales in the USA were higher due to the phasing of high volume contracts - The approval in France for the use of Arimidex as a first line treatment for advanced breast cancer has resulted in market leadership being gained. Further European approvals have recently been received and US sales have also benefited from increased interest in the product following publication of first line data - Changes in US buying patterns have resulted in lower Nolvadex sales but prescriptions remain strong Specialist/Hospital ----------------------------------------- First Quarter ----------------------------------------- 2000 1999 CER % ----------------------------------------- Seroquel 82 47 +74 Zomig 65 39 +72 Merrem 36 38 - Diprivan 164 149 +13 Xylocaine 54 61 -13 Marcaine 21 20 +10 Astra Tech 28 27 +11 Salick Health Care 45 60 -25 ----------------------------------------- Total 658 620 + 8 ----------------------------------------- - Seroquel US prescription market share continues to grow steadily: at the end of March Seroquel had an 8.4 per cent and 9.5 per cent share of total and new prescriptions respectively - The launch of Seroquel in Germany in March and further European launches expected in the second quarter will fuel future growth - Zomig continues to benefit from the steady expansion of the triptan market, notably in the USA and France - As expected, the supply constraints in the USA for Merrem resulting from manufacturing difficulties in mid 1999 have adversely affected sales. This situation will be resolved during the second quarter - Strong growth of Diprivan in Japan continues particularly in the ICU indication. US sales were higher than anticipated as a result of some wholesaler buying - Sales in Salick Health Care were 25 per cent lower following the closure of loss-making and non-strategic centres Geographic Sales ----------------------------------------- First Quarter ----------------------------------------- 2000 1999 CER % ----------------------------------------- USA 2,021 1,739 +16 Europe 1,297 1,370 + 4 Japan 156 127 + 8 RoW 387 394 - 2 ----------------------------------------- - All key products contributed to US sales growth of 16 per cent - In Europe sales in France continued to grow strongly (up 22 per cent) with good results also in Italy and Spain. Sales in the UK were adversely affected by governmental imposed price cuts and parallel trade. In Germany increased pressure to prescribe more generics has resulted in lower sales for a number of products; the effect on comparative sales performance is most notable for Losec and Zestril which were both patent protected in the first quarter of 1999 - Sales growth in Japan remains well ahead of total market growth driven by new product launches and new indications Operating Profit - Operating profit reached USD985 million, an increase of 15 per cent - The operating margin increased to 25.5 per cent from 24.2 per cent in the first quarter of last year; the higher margin is mainly due to the continued realisation of synergy benefits - The general strengthening of the dollar compared to first quarter 1999 exchange rates, particularly against the Euro, reduced profits by three per cent - USD120 million of synergy benefits were realised in the quarter; the majority of the benefits are being realised in selling, general and administrative related areas - On track to achieve $500 million target for the full year - Exceptional items of USD83 million were charged in the quarter relating to the ongoing integration and synergy programmes Agrochemicals ------------------------------------------------------------------------------ All growth rates in this section are at constant exchange rates. Sales grew 12 per cent over the first quarter of 1999. The increase in sales, combined with early benefits from the 1999 restructuring programme has led to a 30 per cent increase in operating profit. Currency effects decreased reported sales by six per cent principally due to the weaker Euro. In contrast, reported operating profit benefited by 12 per cent mainly due to the Brazilian devaluation charges taken in the first quarter of 1999. Sales in the first quarter benefited from an early start to the season. This is likely to affect the overall phasing of Northern Hemisphere sales with a consequent softer second quarter expected. Products ----------------------------------------- First Quarter ----------------------------------------- 2000 1999 CER % ----------------------------------------- Non Selective Herbicides 193 146 +33 Selective Herbicides 160 193 - 12 Total Herbicides 353 339 + 7 Insecticides 109 100 +13 Fungicides 226 203 +21 ----------------------------------------- Total 706 663 +12 ----------------------------------------- - The non-selective herbicide Touchdown continued to develop successfully with substantial growth in all territories, particularly in North America. Competition in selective herbicides contributed to reduced demand under generally adverse market conditions - Insecticides growth was driven by increased sales of the corn insecticide Force from an abnormally low first quarter last year - Increased penetration by the fungicide Amistar continued in all markets Geographic ----------------------------------------- First Quarter ----------------------------------------- 2000 1999 CER % ----------------------------------------- North America 186 171 + 9 Europe 324 311 +17 Latin America 75 63 +19 RoW 121 118 - ----------------------------------------- Total 706 663 +12 ----------------------------------------- - Sales growth in North America reflected an early start to the season - Although conditions remain difficult in Europe, increased Amistar penetration contributed to sales growth - Sales in Latin America finished the season strongly in generally better economic conditions - Sales in the Rest of World markets started steadily Operating Margin The operating margin improved from 10.7 per cent to 14.3 per cent. The increase in sales, combined with early benefits from the 1999 restructuring programme has led to this improvement. Syngenta ------------------------------------------------------------------------------ Plans for the spin-off and merger of the Agrochemicals business with the agrochemicals and seeds activities of Novartis to form Syngenta are progressing well. The transaction is undergoing Phase 2 Review by the European and US authorities and approval is anticipated during the second half of the year. It is planned that an Extraordinary General Meeting will be held on Wednesday, 11 October 2000 to enable AstraZeneca shareholders to vote on the proposed transaction relating to the establishment of Syngenta (as announced on 2 December 1999). Taxation ------------------------------------------------------------------------------ The tax charge for ongoing operations for the first quarter, before exceptional items, was 29.0 per cent. The impact of the proposed tax changes announced in the UK Budget in March is currently being assessed but there is no reason at this point to revise the tax rate objective which was announced at the Annual Results in February. Cash Flow ------------------------------------------------------------------------------ - Net cash funds increased by USD183 million in the first quarter - Cash generated from operating activities amounted to over USD900 million - Expenditure on exceptional items and fixed capital expenditure approached USD300 million each - USD171 million was spent on the share repurchase programme in the quarter Share Repurchase Programme ------------------------------------------------------------------------------ During the first quarter 4,940,000 Ordinary Shares (nominal value USD0.25 each) were purchased for cancellation for an aggregate sum of USD171.2 million. This represents 0.28 per cent of the total issued share capital of AstraZeneca. The total number of shares re-purchased for cancellation since the start of the programme in December now stands at 9,278,444. The total number of shares in issue (as at 31 March 2000) is 1,770 million. Second Quarter Milestones & Key Dates ------------------------------------------------------------------------------ 11 April Zomig: submission of Japanese NDA package for the acute treatment of migraine with or without aura - potential to be the first oral triptan in Japan 13 April Arimidex: approval received for use as 1st line treatment in advanced breast cancer in the UK, Italy, Germany, Spain, Austria and Portugal (approval in France and Holland already received) late April Publication of supplement to Gastroenterology: contains abstracts on Nexium (21 of which will be presented at DDW - see below) 5-8 May Publication of METHRO II study, H376/95 International Congress on Thrombosis, Porto, Portugal 21-24 May Nexium abstracts and presentations Digestive Diseases Week, San Diego, USA 23 May Teleconference call for investors and financial analysts with GI Team to discuss Nexium data 26 May Annual General Meeting 25-30 June Publication of ZD4522 Phase II data 12th International Symposium of Atherosclerosis, Stockholm, Sweden Late June Opening of new R&D facility, Boston, USA 1 August Half Year Results MORE TO FOLLOW QRFSSUSUDSSSEFI

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