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Novartis Q2 Profit Declines; But Raises FY19 Outlook - Quick Facts

Swiss drug major Novartis AG (NVS) on Thursday reported that its second-quarter net income declined 12 percent to $6.80 billion from last year's $7.77 billion. Earnings per share decreased to $2.94 from $3.34 last year.

Net income from continuing operations fell 73 percent to $2.11 billion from $7.73 billion a year ago. Earnings per share from continuing operations were $0.91, down sharply from $3.32 per share last year.

The prior-year quarter's results include a net gain of $5.7 billion from the sale of the company's stake in the GSK consumer healthcare joint venture.

Core net income from continuing operations was $3.10 billion or $1.34 per share, compared to $2.74 billion or $1.18 per share a year ago. The growth in core operating income was driven by higher sales, improved gross margin and productivity programs, partly offset by growth investments.

Net sales to third parties from continuing operations for the quarter grew 4 percent to $11.76 billion from $11.34 billion last year. Net sales rose 8 percent in constant currencies.

The increase in sales was driven by volume growth of 10 percentage points on a constant currency basis, mainly from Cosentyx, Entresto and Lutathera. Strong volume growth was partly offset by the negative impacts of pricing and generic competition.

On average, analysts polled by Thomson Reuters expected the company to report earnings of $1.22 per share for the quarter on sales of $11.49 billion. Analysts' estimates typically exclude special items.

Looking ahead to fiscal 2019, Novartis raised its forecast for core operating income guidance upwards, and now projects it to grow low-double digit to mid-teens in constant currencies, compared to the prior outlook growth in high single digits in constant currencies.

The company also raised its outlook for full-year net sales, which is now projected to grow mid to high-single digits in constant currencies, compared to the prior outlook for growth in mid-single digits in constant currencies.

Further, Novartis said it has appointed Marie-France Tschudin as president of Novartis Pharmaceuticals. She is a member of the Executive Committee of Novartis and will report to Vas Narasimhan, CEO of Novartis.

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