Roche (ROG) H1 2020 earnings summary

Executive summary

• H1 sales rose 1% at CER to CHF 29.3bn despite COVID-19 disruption; core operating profit increased 2% and core EPS increased 2% at CER.

• New pharmaceutical products and COVID-19 testing helped offset biosimilar erosion and reduced routine diagnostics testing.

Financial highlights

• Sales were CHF 29.281bn, down 4% reported and up 1% at CER; core operating profit was CHF 11.766bn, down 5% reported and up 2% at CER.

• IFRS net income was CHF 8.465bn, down 5% reported and up 3% at CER; core net income was CHF 9.443bn, down 5% reported and up 3% at CER.

• Core EPS was CHF 10.44, down 6% reported and up 2% at CER; operations growth more than offset lower gains on product disposals.

• Operating free cash flow was CHF 5.036bn, down 26% at CER; free cash flow was CHF 3.274bn, down 29% at CER.

Outlook and guidance

• FY 2020 outlook confirmed: sales growth at low- to mid-single digit at CER; core EPS growth broadly in line with sales; dividend expected to increase in Swiss francs.

• Guidance reflects the current assessment of COVID-19 impact; ultimate pharmaceutical impact depends on the pandemic’s length and severity.

• High currency impact expected in 2020; assuming 30 June exchange rates hold, full-year sales growth impact is estimated at -5 percentage points, core operating profit at -7 points and core EPS at -8 points.