London: Pharmaceuticals company AstraZeneca PLC on Thursday reported a small drop in fourth-quarter net income and said it would cut a further 6,000 jobs globally by 2013 as it looks to shore up its earnings.
Net income dipped to $1.25 billion in the October-December quarter from $1.27 billion in the same quarter a year earlier, affected by lower than expected sales and currency shifts. Sales rose 4 per cent to $8.2 billion at constant exchange, but were flat when they were taken into account.
During the quarter, the dollar in particular rallied against other major currencies.
For the full year 2008, net profit rose 9 per cent to $6.10 billion from $5.60 billion the year before. Sales were up 7 per cent, when taking into account exchange rate movements, to $31.6 billion. At constant exchange rates sales were up only 3 per cent.
Anti-cholesterol drug Crestor was the London-based company's best-performing drug in 2008, with sales up 26 per cent at constant exchange rates at $3.6 billion.
For 2009, the company said revenues will likely be in line with 2008 levels in constant currency terms but that the exact outcome will depend on global economic conditions.
With overall sales growth relatively modest, the company said it would take further measures to cut costs.
Coupled with the cost-cutting measures announced over the last several years, these actions will save $2.5 billion a year at a total cost of $2.9 billion, the company said. In total, 15,000 jobs will be eliminated over the five-year period. The company, which employs 67,000 people around the world, did not specify where the job losses would be.
"The expansion in the scope of our restructuring efforts is another stop towards sustaining our long-term competitiveness," said AstraZeneca's chief executive David Brennan.
In addition to the job cuts, the company announced further improvements in research and development productivity and said it had up to four new medicines planned for regulatory filing in 2009.
AstraZeneca also said it has increased its dividend by 10 per cent to $2.05 for the full year and added that it will not make any share repurchases in 2009 in order to maintain the flexibility to invest in the business.
Investors were not that impressed by the results and the company's share dropped 3.5 per cent to 27.59 pounds by early afternoon London time.
"The problem for Astra is that topline growth will slow to a standstill as products go off patent, and there's very little in the pipeline," said Jeremy Batstone-Carr, director of private client research at stockbrokers Charles Stanley in London.
Batstone-Carr said he is recommending clients to take profits especially as Astra was the second best-performing stock on the FTSE 100 index of leading British shares last year, having resolved generic threats to its Seroquel anti-psychotic drug and its Nexium heartburn medication.
"We are unconvinced by vague speculation regarding a mega-merger (who would want to right now?) thus we look to lock in good absolute gains achieved over the past 12 months," he said.
Chief executive Brennan told reporters in a conference call that the company was focused on growing its drugs pipeline rather than pursuing a deal with another major drug company.
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