Akzo profits down, as expected
reported a 23 per cent decline in third-quarter earnings, roughly
in line with expectations, on the back of continued pressure on its
pharmaceuticals division.
Dutch pharmaceuticals, chemicals and coatings group Akzo Nobel has reported a 23 per cent decline in third-quarter earnings, roughly in line with expectations, on the back of continued pressure on its pharmaceuticals division.
Pharma has been hit by generic competition to the group's Remeron (mirtazepine) antidepressant in the USA, and the division's sales fell 10 per cent to €900 million, in part due to the dollar's weakness relative to the euro. Operating income at the division declined 34 per cent to €120 million, and the return on sales slipped from 18.8 to 13,7 per cent.
The company's contract manufacturing business, Diosynth, was also affected by a general slowdown in pharma industry growth, according to Akzo's chief financial officer Fritz Froehlich.
Froehlich noted that the SolTab version of Remeron is one exception to the pressure on the drug. Previously-announced cost-saving programs are ahead of schedule, with a workforce reduction in pharma of 800 so far this year.
Commenting on the results, analyst James Knight of Merrill Lynch said: "pharma was disappointing…but no disaster."
He noted that the generic competition issue was clearly the main factor affecting the division, although one disappointment was that the group's new antithrombotic drug Arixtra (fondaparinux sodium),partnered with Sanofi-Synthelabo, did not see any growth acceleration, racking up sales of just €2 million and flat on the second quarter. Diosynth was also light of ML's expectations, he noted.
For the overall group, net profits in the third quarter were €178 million, down from €232 million in the same period of 2002. Sales were €3.3 billion, down 7 per cent, and operating income fell 20 per cent.
Akzo reiterated its forecast of a 20 per cent reduction in net earnings for the full year.
