Irish pharmaceutical firm Warner Chilcott Plc (WCRX: Quote), which is mulling a sale of the company, on Friday reported a profit for the first quarter despite a huge drop in sales of its Actonel osteoporosis drug.
Significant cost cutting helped the company turn a much better than expected quarterly profit.
Still, the company slashed its forecasts for full year earnings and revenue to reflect restructuring charges related to its Western European operations.
Warner, which specializes in women's health care and gastroenterology, reported net income of $113 million or $0.45 per share for the quarter compared to a net loss of $24 million or $0.10 per share last year.
In April 2011, the company unveiled a plan to restructure its operations to move to a wholesale distribution model and minimize operational costs in Belgium, the Netherlands, France, Germany, Italy, Spain, Switzerland and the United Kingdom.
The latest results included $42 million of costs related to the restructuring of the Western European operations. Adjusted cash net income increased to $291 million or $1.16 per share from $266 million.
On average, 20 analysts polled by Thomson Reuters expected earnings of $0.92 per share for the quarter. Analysts' estimates typically exclude special items.
Total revenue dropped 10 percent to $685 million from $757 million. Analysts expected revenues of $648.46 million.
The company attributed the revenue drop to lower sales of osteoporosis drug Actonel due lower U.S. demand and the loss of exclusivity in Western Europe in 2010.
Total Actonel revenues declined 37 percent to $146 million, while hormone therapy Estrace Cream's revenues climbed 49 percent to $52 million.
Cost of sales as well as Selling, general and administrative expenses declined significantly from last year partly due to lower advertising and promotion expenses.
For the full year, the company now expects adjusted cash net income per share in the range of $3.30 to $3.40 compared to the prior forecast of $3.60 to $3.70.
Revenues are now estimated to range from $2.4 billion to $2.5 billion. The previous forecast was for revenues in the range of $2.5 billion to $2.6 billion.
Wall Street expects earnings of $3.65 per share on revenues of $2.53 billion.
The latest guidance adds back the after tax charges expected to be incurred in connection with the Western European restructuring charges.
The revised guidance assumes that generic equivalents of Asacol 400 mg and Estrace Cream products will not be approved and enter the U.S. market during 2012.
Amid declining sales of Actonel and increased generic competition in the U.S., the firm said last month that it is exploring strategic alternatives to enhance shareholder value, including a potential sale of the company.
Media reports indicated that Warner Chilcott could likely be the target of a takeover from German conglomerate Bayer AG's (BAYRY.PK, BAYZF.PK) healthcare division.
WCRX closed on Thursday at $21.63, down from the prior close of $21.97, on a volume of 3.94 million shares. The stock is up 1.71 percent in the pre-market.
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by RTT Staff Writer
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