Roche (ROG) H1 2022 earnings summary

Executive summary

• H1 sales rose 5% at CER to CHF 32.3bn, with growth in Pharmaceuticals and Diagnostics; established products and new launches offset biosimilar erosion.

• Core operating profit increased 9% at CER to CHF 12.7bn and IFRS net income rose 12% to CHF 9.2bn; Core EPS grew 11% to CHF 11.76.

• Performance benefited from a CHF 687m Ultomiris-related out-licensing income item and the Novartis share repurchase; COVID-19 sales declined in Q2 as guided.

Financial highlights

• Sales CHF 32.3bn vs CHF 30.7bn, +5% at CER; IFRS operating profit CHF 11.5bn, +15% at CER.

• Core net income CHF 10.2bn, +7% at CER; IFRS net income CHF 9.2bn, +12%; Core EPS CHF 11.76, +11% at CER.

• Core operating profit CHF 12.7bn, +9% at CER; margin 39.2% vs 37.9%; gross cost of sales rose 14% at CER.

• Operating free cash flow CHF 9.8bn, +21% at CER; free cash flow CHF 7.1bn vs CHF 6.0bn.

• Adjusted for the CHF 3.5p Core EPS contribution from the Ultomiris settlement, core operations contributed CHF 2.9p; share repurchase added CHF 6.1p net accretion.

Outlook and guidance

• FY 2022 sales growth guidance confirmed at stable to low-single digit at CER; Core EPS growth outlook low- to mid-single digit.

• Sales growth expected at high-single digit excluding COVID-19 sales and AHR biosimilar erosion; outlook assumes significantly reduced COVID-19 impact in H2.

• FY drivers include ~CHF 5bn COVID-19 sales and ~CHF 2.5bn AHR erosion; new Pharma products and Diagnostics base business expected to support growth.

• Dividend expected to increase further in Swiss francs.