Teva net up 21%; forex effects are in focus

TEL AVIV (MarketWatch) -- Teva Pharmaceutical Industries Ltd. reported third-quarter net income rose 21% on 20% higher sales, led by sales of its flagship drug but also hurt by currency fluctuations and what analysts called lagging sales outside North America.

Earnings reached $637 million, or 77 cents a share, from $525 million, or 64 cents, in the year-earlier period. Adjusted profit was 72 cents against 64 cents.

Sales rose to $2.84 billion from $2.37 billion.

A survey of analysts by FactSet Research produced consensus estimates of 71 cents of profit on $2.9 billion of sales.

Teva shares (TEVA:

teva pharmaceutical inds ltd adr

News, chart, profile, more

Last: 40.60-0.07-0.17%
4:00pm 11/06/2008
Delayed quote data

Add to portfolio
Analyst
Create alert

Insider
Discuss
Financials

Sponsored by:

TEVA 40.60, -0.07, -0.2%) were recently down 4.9% within a sharply lower Tel Aviv Stock Exchange.

Initial analyst reactions were mixed, with Excellence Nessuah calling the overall report "mediocre" but also saying Teva's net beat its estimate by 3 cents a share and its cash generation was "impressive." It affirmed Teva a buy.

Leader Capital Markets said Teva's gross-profit margin -- which shrank 0.03 percentage point to 52.5% -- came in a full percentage point below consensus due to forex effects.

Excellence said the company's European sales -- up 10% to $685 million -- came up short. And Leader was disappointed by sales of generics outside North America.

Sales of the company's flagship drug, the multiple-sclerosis medication Copaxone, rose 28% to $562 million, Teva reported. Sales of Azilect for Parkinson's rose 38% to $46 million.\

Exchange-rate effects added 4% to global sales due to the dollar's weakness in the quarter against the euro, the shekel and Hungary's forint.

Currency exchange knocked $18 million off operating profit as the shekel stood strong and the British pound weakened, Teva said.

"What saved the day," Leader said, "was a very low tax rate and one-time financial [income,] mainly due to a $100 million [auction-rate securities] settlement."

The tax rate was 7% against 19% a year earlier.

And on Oct. 27, Teva said it had settled with "an institution that acted as a broker in placing investments in Teva's portfolio" of ARSs. The two sides settled on a payment of $100 million to Teva. The company didn't identify the institution.

For the third quarter, Teva recorded a charge of $26 million for impaired financial assets, including $19 million related to the ARS portfolio. At Sept. 30, the ARS portfolio was $261 million.

At Oct. 28, Teva had 145 product applications awaiting final clearance by the U.S. Food and Drug Administration. These include 41 tentative clearances.

Robert Daniel is MarketWatch's Middle East bureau chief, based in Tel Aviv.

source