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Shire Q4 Profit Surges On U.S. Tax Reform; Sees 2018 Profit Below View

Shire plc (SHP.L,SHPG) reported a fourth-quarter that surged from the prior year, due to a tax benefit in 2017 driven by U.S. tax reform, higher total revenues and the realization of operating synergies, partially offset by the impact of higher acquisition and integration costs.

In the Wednesday's pre-market, SHPG is currently trading at $130.70, down $1.97 or 1.48%.

Looking ahead for 2018, the company expects earnings per ADS to be in the range of $7.30 - $7.90, Non-GAAP earnings per ADS of $14.90 - $15.50. Analysts expect annual earnings of $15.84 per share for 2018.

For 2018, the company projects total product sales to be between $14.9 billion and $15.3 billion. Wall Street expect revenues of $15.5 billion.

The Board resolved to pay an interim dividend of 29.79 U.S. cents per Ordinary Share in 2017, compared to 25.70 U.S. cents per Ordinary Share paid in 2016).
The company expects to deliver mid-single digit product sales growth in 2018 after absorbing the anticipated impact of generics.

The company noted that the mid-term outlook for growth is positive driven by Immunology franchise, multiple near-term launches, and international markets. It is committed to achieving its projected revenue target of $17 billion - $18 billion in 2020.

Based on current assumptions, the company expects Non GAAP earnings per ADS growth to be lower than top line growth in 2018, mainly due to costs incurred from the start-up of new US plasma manufacturing site, intensifying genericization, and lower royalties. With the already disclosed manufacturing and SG&A cost reduction initiatives, It is on track to achieve mid-forties Non GAAP EBITDA margin by 2020.

The company reported that its net income for the fourth-quarter surged to $3.11 billion from $457.3 million in the prior year. Earnings per ADS surged to $10.22 from the prior year's $1.51, primarily due to a tax benefit in 2017 driven by U.S. tax reform, higher total revenues and the realization of operating synergies, partially offset by the impact of higher acquisition and integration costs.

Non GAAP earnings per ADS for the fourth-quarter increased 18% to $3.98 from the previous year's $3.37, primarily due to higher Non GAAP operating income related to higher Non GAAP total revenues and the realization of SG&A expense synergies from the acquisition of Baxalta, partially offset by a lower Non GAAP gross margin. Analysts polled by Thomson Reuters expected the company to report earnings of $3.88 per share. Analysts' estimates typically exclude special items.

Operating income increased 17% to $850 million from last year, primarily due to higher revenues and the realization of Baxalta operating expense synergies, partially offset by higher acquisition and integration costs.

Non GAAP operating income increased 11% to $1.553 billion from the previous year, primarily due to higher Non GAAP total revenues and lower expenses as a percentage of Non GAAP total revenues, driven by operating efficiencies and synergies.

Product sales increased 8% to $3.911 billion from the prior year, primarily due to strong growth from Immunology franchise, up 15%, and our Neuroscience franchise, up 16%.

Total revenues for the quarter grew to $4.14 billion from $3.81 billion last year. Wall Street analysts had a consensus revenue estimate of $3.97 billion.

Non GAAP total revenues were $4.070 billion, up 7%, excludes the impact of a receipt of an upfront license fee.

by RTTNews Staff Writer

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