Alcon Posts 5.9 Percent Sales Growth for Third Quarter

Third Quarter Highlights

 

  • Organic sales growth was 9.0 percent
  • Operating profit rose 17.0 percent to $578 million
  • Sales of advanced technology intraocular lenses increased 34.2 percent
  • Management raises outlook for full year earnings per share

HUENENBERG, Switzerland--(BUSINESS WIRE)--Oct 27, 2009 - Alcon, Inc. (NYSE:ACL) reported global sales rose 5.9 percent to $1,614 million for the third quarter of 2009, or a 9.0 percent increase excluding the impact of foreign exchange fluctuations. Net earnings for the third quarter of 2009 were $515 million, or $1.71 per diluted share. Excluding the impact of a $240 million tax benefit related to the refractive product line in 2008 and the impact of continuing expenses related to the first quarter 2009 reduction in force, adjusted net earnings for the third quarter 2009 would have grown 33.3 percent compared to non-GAAP adjusted net earnings for the third quarter of 2008.

“Continued execution of our operational strategies combined with an improved market environment drove our solid third quarter performance,” said Kevin Buehler, Alcon's president and chief executive officer. “We continue to achieve organic sales growth and market share growth with contributions from multiple areas, but especially from advanced technology intraocular lenses, glaucoma treatments and emerging markets. We expect these factors to continue to support solid organic growth, which, along with a more favorable currency environment, allows us to raise our earnings outlook for the remainder of the year.”

Sales Highlights

Summarized below are sales highlights for the third quarter of 2009. All growth comparisons are for the third quarter of 2009 compared to the third quarter of 2008. Organic sales growth rates exclude currency impacts and acquisitions and are non-GAAP measures that are reconciled in a table at the end of this release.

 

  • International organic sales growth was 10.1 percent (+4.5 percent reported), with the Brazil, Russia, India and China (BRIC) nations leading organic growth, rising 13.3 percent (+0.6 percent reported).
  • U.S. sales rose 7.6 percent as prescription demand improved and on strong revenue growth in glaucoma and advanced technology AcrySof® intraocular lenses.
  • Global sales of advanced technology intraocular lenses rose 37.7 percent organically (34.2 percent reported) due to U.S. market share gains of the AcrySof® IQ ReSTOR® +3.0 lens and broader and more frequent use of the AcrySof® IQ Toric lens by cataract surgeons.
  • Global glaucoma sales increased 18.2 percent, led by a 23.6 percent rise in global sales of the TRAVATAN® family of products (TRAVATAN®, TRAVATAN Z® and DuoTravTM ophthalmic solutions). Azopt® and Azarga® ophthalmic solutions also added to glaucoma sales growth, together rising 16.9 percent.
  • The launch of the Constellation® vitreoretinal system contributed to a 19.5 percent growth of sales in the company's vitreoretinal business.

Earnings Highlights

Summarized below are earnings highlights for the third quarter of 2009. All growth comparisons are for the third quarter of 2009 compared to the third quarter of 2008.

 

  • Gross profit margin was in line with management expectations at 75.3 percent compared to 77.2 percent in 2008. The decline was primarily attributable to the impact of foreign exchange rates on costs of goods sold in each period.
  • Operating profit rose 17.0 percent and operating profit margin increased from 32.4 percent to 35.8 percent of sales. This improvement resulted from cost management programs that reduced selling, general and administrative expenses to 29.4 percent from 32.9 percent of sales. Research and development expenses were 9.8 percent of sales and were lower than 2008 due to timing differences for research projects and licensing transactions between the two periods.
  • Net earnings in the third quarter of 2009 were $515 million compared to $627 million in 2008. Excluding a $240 million tax benefit in 2008 and the impact of continuing expenses related to the first quarter 2009 reduction in force, adjusted net earnings grew 33.3 percent. This increase was attributable to reduced operating expenses and investment portfolio gains compared to investment losses in the third quarter 2008.

Other Highlights

 

  • On September 15, 2009, Alcon acquired the Swiss biotechnology firm ESBATech AG providing the company with a sustainable platform of biologic development utilizing antibody fragment technology particularly suited to treat ocular diseases.
  • Alcon entered into a licensing and purchase option agreement in October with Potentia Pharmaceuticals for POT-4 for the treatment of age-related macular degeneration.
  • On October 2, 2009, the company launched brimonidine 0.15% in the United States which is the only non-branded version of Alphagan® P 0.15% on the market.
  • Alcon received approval for DisCoVisc® viscoelastic system, the PUREPOINT™ laser and the Laureate® world phaco system in Japan in the third quarter of 2009.
  • During the quarter Alcon received additional country approvals of Vigamox® ophthalmic solution and the drug is now approved in a majority of European Union countries.
  • The U.S. District Court for the District of Delaware issued an opinion on October 19, 2009 finding in Alcon's favor on all claims and defenses in the Vigamox case against Teva that was tried in March 2008.

Financial Guidance

The company reaffirmed its previously-issued sales guidance for full year 2009 organic sales growth to be in the mid-single digits. The company raised its guidance for full year 2009 diluted earnings per share on a U.S. GAAP basis to between $6.55 and $6.65 and between $6.60 and $6.70 on a non-GAAP adjusted basis (excluding restructuring charges taken in 2009). This increase reflects the positive results year to date and an improving market environment, partially mitigated by the expectation of higher R&D and SG&A expenses in the remainder of the year.

Company Description

Alcon, Inc. is the world's leading eye care company, with sales of $6.3 billion in 2008. Alcon, which has been dedicated to the ophthalmic industry for 65 years, researches, develops, manufactures and markets pharmaceuticals, surgical equipment and devices, contact lens care solutions and other vision care products that treat diseases, disorders and other conditions of the eye. Alcon's majority shareholder is Nestlé, S.A., the world's largest food company. All trademarks noted in this release are the property of Alcon, Inc. For more information about Alcon, visit www.alcon.com.

ALCON, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings (Unaudited)

(in millions, except share data)

 

         
    Three months ended

 

  Nine months ended

 

    September 30,

 

  September 30,

 

      2009

 

      2008

 

      2009

 

      2008

 

 
                 
Sales

 

  $

 

1,614

 

    $

 

1,524

 

    $

 

4,784

 

    $

 

4,796

 

 
Cost of goods sold

 

    399

 

      348

 

      1,168

 

      1,161

 

 
                 
Gross profit

 

    1,215

 

      1,176

 

      3,616

 

      3,635

 

 
                 
Selling, general and administrative

 

    474

 

      501

 

      1,414

 

      1,512

 

 
Research and development

 

    158

 

      174

 

      461

 

      461

 

 
Amortization of intangibles

 

    5

 

      7

 

      17

 

      22

 

 
                 
Operating income

 

    578

 

      494

 

      1,724

 

      1,640

 

 
                 
Other income (expense):

 

               
Gain (loss) from foreign currency, net

 

    --

 

      (10

 

)

 

    (1

 

)

 

    (7

 

)

 

Interest income

 

    13

 

      20

 

      37

 

      66

 

 
Interest expense

 

    (3

 

)

 

    (13

 

)

 

    (13

 

)

 

    (45

 

)

 

Other, net

 

    6

 

      (42

 

)

 

    12

 

      (52

 

)

 

                 
Earnings before income taxes

 

    594

 

      449

 

      1,759

 

      1,602

 

 
                 
Income taxes

 

    79

 

      (178

 

)

 

    210

 

      (21

 

)

 

                 
Net earnings

 

  $

 

515

 

    $

 

627

 

    $

 

1,549

 

    $

 

1,623

 

 
                 
                 
Basic earnings per common share

 

  $

 

1.72

 

    $

 

2.10

 

    $

 

5.19

 

    $

 

5.44

 

 
                 
Diluted earnings per common share

 

  $

 

1.71

 

    $

 

2.07

 

    $

 

5.15

 

    $

 

5.38

 

 
                 
Basic weighted average common shares

 

    298,875,564

 

      299,076,483

 

      298,734,923

 

      298,428,116

 

 
                 
Diluted weighted average common shares

 

    301,894,468

 

      302,636,080

 

      300,856,409

 

      301,920,346

 

 
                 
ALCON, INC. AND SUBSIDIARIES

Global Sales

(USD in millions)

 

                 
    Three Months Ended       Foreign    
    September 30,       Currency   Organic
      2009       2008     Change   Change   Change
Geographic Sales                    
Alcon United States:                    
Pharmaceutical   $ 324     $ 301     7.6 %   -- %   7.6 %
Surgical     304       275     10.5     --     10.5  
Consumer Eye Care     105       105     --     --     --  
                     
Total United States Sales     733       681     7.6     --     7.6  
                     
Alcon International:                    
Pharmaceutical     335       308     8.8     (7.4 )   16.2  
Surgical     435       417     4.3     (4.1 )   8.4  
Consumer Eye Care     111       118                  

Posted: October 2009


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