AstraZeneca to cut 7,300 jobs, predicts lower earnings in 2012 - UPDATE
Pharmaceuticals giant AstraZeneca has reported a strong rise in earnings in 2011 but, in an attempt to "enhance productivity" and reduce costs, the company has revealed it will by making 7,300 job cuts.
Pharmaceuticals giant AstraZeneca has reported a strong rise in earnings in 2011 but, in an attempt to "enhance productivity" and reduce costs, the company has revealed it will by making 7,300 job cuts.
Shares fell 1.5% to 3,043.5p in early trading on Thursday.
To make things worse, the group said a decline in both constant currency revenues and core earnings per share (EPS) is expected in 2012.
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Full-year revenues edged 1% higher to $33,591m, up from $33,269m in 2010, a fall of 2% at constant exchange rates (CER), after the firm saw strong double-digit sales growth for Crestor, Seroquel XR and Symbicort. Emerging Market revenue increased by 10% in 2011.
However, the group said that generic competition had a $2bn adverse impact on full-year revenues, while government price interventions caused a $1bn loss to sales.
Reported EPS jumped 29% at CER to $7.33 helped by the disposal of Astra Tech, while core EPS (which excludes certain items) rose by 7% to $7.28, but this is expected to decline in the current year.
Reported pre-tax profits increased 13% from $10,977bn to $12,367m, up 11% at CER. However, core pre-tax profits fell by 3%, down 4% at CER.
The full-year dividend increased by 10% to $2.80.
"Disciplined execution of our strategy has delivered a good performance in 2011 in the face of intensified pricing pressure and generic competition," according to Chief Executive Officer David Brennan.
In 2012, Astra said that revenue will continue to be adversely affected by government interventions on pricing and ongoing generic competition. As such, constant currency revenue is expected to decline by a low double-digit rate. Core pre-R&D (research and development) operating margin will be below 2011, but will remain in the upper half of the 48-54%-of-revenue range. Core EPS is expected to be between $6 and $6.30.
The group has lowered its risk-adjusted view of the potential revenue contribution from recently launched and pipeline products to $2-4bn, down from a previous estimate of $3-5bn.
"While the further expected losses of market exclusivity make for a challenging 2012 outlook, we remain committed to a long-term, focused, R&D based strategy, and today we have announced further steps to drive productivity in all areas to improve returns on our investment in innovation," Brennan said.
Since 2007, the group has undergone a restructuring programme in order to reduce costs which has already resulted in a 21,600 headcount reduction. The new set of restructuring initiatives announced today is an attempt to "further reduce costs and increase flexibility in all functional areas, whilst continuing to drive innovation and externalisation of the R&D portfolio to create future value." These are targeted of creating annual benefits of $1.6bn by the end of 2014.
However, total programme costs will be $2.1bn, $261m of which were charged in the fourth quarter of 2011. "The total number of positions expected to be impacted for this phase is estimated to be approximately 7,300," Astra said.
In last place, the company's board has announced plans for a $4.5bn in net share repurchases for 2012.
As of 09:28am shares of AstraZeneca are falling 3.3% to 2,986.5p.
BC
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