Roche (ROG) H2 2020 earnings summary

Executive summary

• FY 2020 targets achieved despite COVID-19: sales +1% and core EPS +4% at CER; proposed dividend CHF 9.10 per share.

• Diagnostics growth and new Pharma products offset CHF 5.1bn of biosimilar erosion and pandemic pressure on sales.

Financial highlights

• Sales CHF 58.323bn, down 5% reported and up 1% at CER; currency impact was -6 percentage points.

• Core operating profit CHF 21.536bn, down 4% reported and up 4% at CER; core EPS CHF 19.16, down 5% reported and up 4% at CER.

• IFRS net income CHF 15.068bn, up 7% reported and 17% at CER; core net income CHF 17.378bn, down 4% reported and up 5% at CER.

• Operating free cash flow CHF 14.815bn, down 29% reported and 21% at CER; free cash flow CHF 10.943bn, down 35% reported and 26% at CER.

Outlook and guidance

• FY 2021 sales growth targeted at low- to mid-single digits at CER; core EPS growth expected broadly in line with sales, with a further CHF dividend increase planned.

• Guidance assumes general normalization in H2 2021; Pharma new-product growth expected to more than offset biosimilar impact, while Diagnostics growth is expected to be strong, particularly in H1.

• Additional Avastin, Herceptin and MabThera/Rituxan erosion expected to reduce sales by CHF 4.6bn; focus is on investment while defending margins.

• At 31 Dec 2020 FX rates, 2021 currency impact forecast at -3 to -5 percentage points on sales, core operating profit and core EPS.