Astra lifts earnings target

Drugs giant AstraZeneca today upped its earnings guidance for the year after reporting a better-than-expected hike in third quarter profits.

The group said pre-tax profits rose to $2.44bn (€1.9bn) in the three months to the end of September, up 29%, helped by currency movements.

Sales increased by 9% to €9.8bn in the quarter, with non-US business offsetting flat growth in America after its high blood pressure treatment Toprol-XL was hit by competition from cheaper generic rivals.

Sales of Toprol in the US plunged by $141m (€109m).

UK-based AstraZeneca said it was on track to achieve two thirds of its annual $1.4bn (€1bn) cost savings target by the end of the year – a three-year programme which is seeing the group shed 7,600 staff.

The group remained tight-lipped on the number of roles axed so far, but said efforts had been focused on areas including its sales and marketing operations across the UK and Western Europe and IT outsourcing.

Astra said the cost of the overhaul totalled $117m (€90m) in the third quarter.

Excluding restructuring charges, which impacted on last year’s figures, third quarter profits rose by a more muted 24%, according to the group.

David Brennan, chief executive of AstraZeneca, said: “AstraZeneca has delivered a robust set of results that deliver on our performance commitments despite an increasingly challenging environment for the pharmaceutical sector and business in general.

“We continue to make good progress on reshaping our cost base, including advancing innovation in our research and development activities with greater productivity and efficiency.”

The group said it was putting its ongoing share buyback scheme on hold for the rest of the year to provide available cash for the group to invest and look at acquisitions.

GlaxoSmithKline announced a similar move last week and said it was eyeing opportunities amid the credit crisis, which is thought to be offering a chance to snap up assets cheaply.

Astra reported sales of its cholesterol fighting drug Crestor up 28% in the quarter on a constant currency basis, while asthma treatment Symbicort showed strong growth of 25%.

The rises helped counter a 2% fall in sales of ulcer and heartburn treatment Nexium, which is under pressure from generic competition.

Shares rose 5% today as investors cheered its quarterly performance and news that Astra is now aiming for a rise in earnings per share to between $4.90 and $5.05.

Jeremy Batstone-Carr, Charles Stanley analyst, said the group’s figures were boosted by currency movements, but added its operational performance was also better than forecast.

He said the stock was an attractive safe haven against the stock market volatility.

“AstraZeneca shares have been amongst the best performers, not just in the pharmaceutical sector but across the entire market over the tumultuous autumn,” he said.