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AstraZeneca Stock Dips On Weak Q1 Profit; Backs FY18 View

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Shares of AstraZeneca (AZN.L,AZN) were losing around 2 percent in the London trading after the British drug major reported Friday lower profit in its first quarter amid weak margin, despite growth in product sales. Further, the company reiterated its outlook for fiscal 2018.

"Progress was made on overall cost discipline, while the level of Externalisation Revenue, divestment timing and investment in launches impacted the overall results. Patients continued to benefit from the progress of the pipeline and AstraZeneca's plans remain on track, with the Company continuing to anticipate Product Sales growth this year, weighted to the second half," the company said in its statement.

For the first quarter, profit before tax declined 36% to $374 million from $582 million last year. Profit attributable to owners of the Parent dropped to $340 million from $537 million in the prior year.

Earnings per share were $0.27, down 37% from $0.42 a year ago. Core earnings per share were $0.48, down 51 percent.

In the quarter, operating profit declined 24% to $696 million, and core operating profit fell 46 percent to $896 million.

Gross Margin declined by five percentage points to 77.3%, and Core Gross Margin fell by five percentage points to 78.8%.

Total revenue for the quarter declined 4 percent to $5.18 billion from $5.41 billion last year, reflecting a 66 percent drop in Externalisation Revenue in the quarter. Revenues dropped 9 percent at constant exchange rates.

Product sales, meanwhile, grew 3 percent to $4.99 billion on a reported basis, but dropped 2 percent at constant rates. The company noted that strong performance of China and newer medicines across all therapy areas was offset by the decline of Crestor sales in Europe and Japan.

Looking ahead, for fiscal 2018, AstraZeneca still projects core earnings per share of $3.30 to $3.50. The company still expects full-year product sales, at constant currency rates, to show a low single-digit percentage increase.

The anticipated growth in Product Sales is weighted towards the second half of the year, reflecting the remaining impact of generic competition, namely Crestor in Europe and Japan, as well as the growing contribution from newer medicines, the company noted.

In London, AstraZeneca shares were trading at 5,216 pence, down 2.41 percent.

by RTTNews Staff Writer

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