Roche 2010 Net Profit Up 4% at CHF8.89Bln, Sales Drop 3%

Swiss pharmaceutical company Roche Holding AG (ROG.VX) Wednesday said net profit rose 4% in 2010 to CHF8.89 billion, with sales declining 3% to CHF47.47 billion.

Roche expects group and drug sales to grow at low-single-digit rates in local currencies and excluding flu drug Tamiflu, in line with market growth.

MAIN FACTS:

-Group sales increase 5% in local currencies, excluding Tamiflu; including Tamiflu, Group sales remain stable in local currencies at 47.5 billion Swiss francs.

-Growth momentum maintained throughout 4th quarter due to continued uptake for Actemra, Herceptin, MabThera and immunoassays.

-Core operating profit increases 7% in local currencies to 16.6 billion Swiss francs, core operating profit margin up by 1.7 percentage points to 34.9%; operating free cash flow of 14.1 billion Swiss francs underscores financial strength.

-Net income increases 4% to 8.9 billion Swiss francs despite significant costs in connection with the 'Operational Excellence' initiative.

-Core Earnings per Share 10% higher at constant exchange rates and 4% higher in Swiss francs.

-Implementation of Operational Excellence on track; Group-wide review of structures and processes aims to accelerate productivity improvements and strengthen innovation capacity; cost savings of 2.4 billion Swiss francs from 2012 onwards; restructuring charges of 2.7 billion Swiss francs, of which 1.3 billion Swiss francs were included in the 2010 operating results.

-Board proposes a dividend increase of 10% to 6.60 Swiss francs, the 24th consecutive year of dividend growth; this would increase the payout ratio to 52%.

-Pharmaceuticals sales up 5% in local currencies, excluding Tamiflu, above the global market. Major growth drivers are key products for cancer, Actemra/RoActemra for rheumatoid arthritis and Lucentis in ophthalmology.

-Core operating profit margin increases significantly, by 1.9 percentage points to 39.9%.

-Roche has made the decision to stop the development of taspoglutide for type 2 diabetes and to return the product to Ipsen.

-Zurich Bureau, Dow Jones Newswires; [phone]; [e-mail]