NVS Novartis AG

    By Cecilia Butini 
 

Novartis AG on Tuesday fine-tuned its outlook after second-quarter earnings and sales declined, as the stockpiling of medicines triggered by the coronavirus pandemic in the first quarter largely reversed.

The Swiss pharmaceutical company now expects 2020 sales to grow at a mid-single digit rate, down from a previous forecast for mid- to high-single digit growth. Core operating income is seen rising at a low double-digit rate, up from guidance for a high single-digit to low double-digit increase previously.

"During the second quarter, Covid-19 had an impact on our business with forward purchasing from the first quarter largely reversing," Novartis said. It said operations remained stable nevertheless.

Profit from continuing operations in the quarter was $1.87 billion, down 4% at constant currencies compared with the same quarter a year ago. Core operating income rose 6% to $3.7 billion due to lower spending and an improved gross margin.

Net sales from continuing operations fell to $11.3 billion from $11.7 billion. An analysts' consensus forecast provided by FactSet estimated second-quarter sales of $11.83 billion.

"Our product portfolio remains resilient despite Covid-19 negatively impacting sales in April and May," the company said. Among other things, the pandemic meant fewer patient visits to doctors, the drug company noted.

Analysts at Vontobel said Novartis remained on track for the full year despite guidance adjustments.

"Overall, as expected, the second quarter took a pandemic hit, mainly compensating for the strong beat seen in the first quarter, that was also driven by the pandemic," Vontobel said.

But the outlook for Novartis however assumes a stable second half. This "is not a given when looking at the many flare-ups of daily new cases around the globe -and in particular in the U.S.," Vontobel said.

Novartis said its guidance assumes a continued return to normal global healthcare systems including prescription dynamics, and particularly ophthalmology, in the second half.

Write to Cecilia Butini at cecilia.butini@wsj.com

(END) Dow Jones Newswires

July 21, 2020 03:53 ET (07:53 GMT)

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