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Second Quarter Results
The New York-based Bristol-Myers Squibb reported net earnings of $764 million or $0.38 per share, up from $706 million or $0.36 per share in the same quarter last year. Net earnings from continuing operations also rose to $722 million or $0.36 per share from $588 million or $0.30 per share in the year-ago quarter.
Excluding items, net earnings from continuing operations would have been $861 million or $0.43 per share, higher than $608 million or $0.31 per share in the prior year quarter. On average, 12 analysts polled by First Call/Thomson Financial predicted the company to report earnings of $0.40 per share.
Net sales from continuing operations increased 16% to $5.2 billion from $4.5 billion in the previous year quarter. Eleven Wall Street analysts had a consensus revenue projection of $5.09 billion. Sales growth was helped by a 5% favorable foreign exchange transaction.
Last week, Bristol Myers' rival Novartis AG (NVS | Quote | Chart | News | PowerRating) reported its second-quarter net income of $2.26 billion, up 12% from $2.02 billion a year ago. Net income attributable to equity holders grew to $2.249 billion from $2.008 billion and earnings per share rose 16% to $0.98 from prior year's $0.85. Net income from continuing operations increased 17% to $2.266 billion from $1.943 billion and earnings per share grew 20% to $0.98 from $0.82 in the previous year.
Net sales from continuing operations rose 14% to $10.73 billion from $9.40 billion last year. The growth was 5% at local currency. The company noted that Pharmaceuticals grew ahead of expectations and succeeded in overcoming the impact of 2007 challenges in the US.
Bristol Myers said that its Pharmaceutical net sales grew 16% to $4.5 billion, while Nutritionals net sales rose 17% to $728 million over the comparable 2007 period. U.S. pharmaceutical net sales witnessed an increase of 17% to $2.6 billion due to higher sales of Plavix, the continued rises of Abilify and strong results from the HIV and hepatitis portfolio and higher contribution from the recent product launches of Orenica and Ixempra.
International pharmaceutical net sales grew 15% to $1.9 billion on increased sales of Baraclude, Abilify, Sprycel and the HIV portfolio besides a 12% favorable foreign exchange impact.
The company's cost of product sold, as a percentage of net sales, rose to 32.1% from 31.5% due to increased manufacturing rationalization charges due to the implementation of the productivity transformation initiative or PTI that represented a 0.8% rise, partly offset by manufacturing cost improvements.
Research and development costs rose 9% to $826 million from $755 million due to increased spending for pipeline compounds and higher upfront and milestone payments in the latest quarter. The recent quarter results were also hurt by a 2% foreign exchange impact.
While marketing, selling and administrative costs rose 6% to $1.165 billion due to implementation costs in connection with the PTI, advertising and product promotion spending increased 19% to $420 million on higher investment in Abilify and Orenica.
During the latest quarter, Bristol Myers said that it reduced its net debt by $386 million and it had cash flow from operations of $1.1 billion.
Commenting on the results, the company's chairman and chief executive officer James Cornelius said, "We are making measurable strides against the strategy we outlined for investors last year. In addition to strong sales growth, we are making acquisitions, entering licensing agreements and investing in our pipeline, as we deliver on our commitments to patients and investors."
Six-Months Results
For the first half, Bristol Myers reported net earnings of $1.43 billion or $0.72 per share, up from $1.4 billion or $0.71 per share in the corresponding period last year. Net earnings from continuing operations were $1.37 billion or $0.69 per share, higher than $1.18 billion or $0.60 per share in the previous year six-months period.
Net sales increased to $10.09 billion from $8.53 billion in the comparable 2007 period.
Expectations
Moving ahead, Bristol-Myers reaffirmed its 2008 earnings from continuing operations and adjusted earnings from continuing operations forecast of $1.36-$1.46 per share and $1.60-$1.70 per share respectively. Sixteen Wall Street analysts have a consensus earnings target of $1.65 per share.
The company also reiterated that it sees adjusted earnings from continuing operations per share to rise at a minimum of 15% compounded annual rise from the 2007 base till 2010 without rebasing.
Similarly, Novartis reaffirmed its fiscal 2008 expectations for record net sales and earnings from continuing operations entirely focused on healthcare. Net sales from continuing operations for the Group are expected to rise at a mid-single-digit rate, and at a low-single-digit growth rate in the Pharmaceuticals Division, both in local currencies. Sandoz is now expected to achieve mid-single-digit net sales growth for the full year in local currencies.
On the productivity initiatives, Bristol-Myer's chief financial officer Jean-Marc Huet said, "As part of the plan to maximize our growth opportunities through 2011 and improve our earnings base in 2012-2013, we have initiated an expansion of our productivity initiatives which will result in an additional $1 billion of cost savings by 2012." He added, "While managing our cost base is critical, it is only one part of our strategy as we transition to a next-generation BioPharma company. We continue to invest to improve the growth of our marketed products and strengthen our pipeline. We are confident that we can deliver on our commitments and improve our base business in 2012-2013."
Stock Movement
Currently, shares of Bristol-Myers are trading up by $0.21 or 1.015 at $22.11. During the 52-week period, the stock hit a high of $31.78 and a low of $19.43.
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