Novo Nordisk's Diabetes and Obesity Drugs Boost Net Profit

By Dominic Chopping

Danish pharmaceutical company Novo Nordisk AS (NOVO-B.KO) on Friday posted forecast-beating first-quarter net profit on the strength of its diabetes and obesity treatments, but the negative effects of foreign-exchange hedges weighed on the result.

Net profit for the three months ended March 31 fell to 10.45 billion Danish kroner ($1.57 billion) from DKK10.75 billion a year earlier, beating the DKK9.74 billion forecast by analysts in a FactSet poll. Sales rose 8.8% to DKK29.29 billion against analysts' expectations of DKK28.93 billion.

"We delivered very solid performance in international operations, driven by sales growth in all regions, meanwhile, sales in the U.S. were negatively impacted by inventory reductions," said Chief Executive Lars Fruergaard Jorgensen.

Sales in the quarter were boosted by Novo Nordisk's diabetes and obesity treatments, but margins came under pressure due to lower margin insulin products and lower prices, primarily related to the insulin market in the U.S.

The company reiterated intensifying global competition both within diabetes and biopharmaceuticals, especially within the hemophilia-inhibitor segment.

In addition, continued pricing pressure within diabetes is expected, especially in the U.S.

Foreign-exchange losses totaled DKK876 million in the quarter compared with a gain of DKK1.11 billion last year.

"This development reflects a loss on foreign-exchange hedging, involving especially the U.S. dollar versus the Danish krone," the company said.

For 2019, sales growth measured in local currencies is still seen at 2% to 5%, but reported growth is now expected to be around three percentage points higher, from a previous expectation of around two percentage points higher.

Operating profit growth is still expected to be 2% to 6% measured in local currencies, while reported figures are now expected to be around five percentage points higher from previous guidance of around 4 percentage points higher.

However, the company said it now sees a loss of around DKK3.3 billion under financial items this year, due to foreign-exchange hedging losses. It previously saw a loss of around DKK2.4 billion.

Write to Dominic Chopping at [e-mail]; @domchopping @WSJNordics

(END) Dow Jones Newswires

May 03, 2019 02:48 ET (06:48 GMT)

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