Novartis Fourth Quarter and Full Year 2022
Condensed financial report - supplementary data
Novartis Global Communications
Novartis Fourth Quarter and Full Year 2022
Condensed Financial Report -
Supplementary Data
INDEX | Page |
GROUP AND DIVISIONAL OPERATING PERFORMANCE | |
Group | 3 |
Innovative Medicines | 8 |
Sandoz | 14 |
CASH FLOW AND GROUP BALANCE SHEET | 16 |
INNOVATION REVIEW | 19 |
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | |
Consolidated income statements | 22 |
Consolidated statements of comprehensive income | 24 |
Consolidated balance sheets | 25 |
Consolidated statements of changes in equity | 26 |
Consolidated statements of cash flows | 28 |
Notes to condensed consolidated financial statements, including update on legal proceedings | 30 |
SUPPLEMENTARY INFORMATION | 50 |
CORE RESULTS | |
Reconciliation from IFRS results to core results | 52 |
Group | 54 |
Innovative Medicines | 56 |
Sandoz | 57 |
Corporate | 58 |
ADDITIONAL INFORMATION | |
Reconciliation of 2021 IFRS results and non-IFRS measures core results and free cash flow to | |
exclude the impacts of the 2021 divestment of our Roche investment | 58 |
Condensed consolidated changes in net debt | 60 |
Share information / Free cash flow | 61 |
Effects of currency fluctuations | 63 |
DISCLAIMER | 66 |
2
Group
Key Figures
Fourth quarter
Excluding Roche investment impacts2 | Reported | ||||||
Q4 2022 | Q4 2021 | % change | % change | Q4 2021 | % change | % change | |
USD m | USD m | USD | cc1 | USD m | USD | cc1 | |
Net sales to third parties | 12 690 | 13 229 | -4 | 3 | 13 229 | -4 | 3 |
Divisional operating income | 2 218 | 2 854 | -22 | -13 | 2 854 | -22 | -13 |
Corporate income and expense, | |||||||
net | -269 | -292 | 8 | 2 | -292 | 8 | 2 |
Operating income | 1 949 | 2 562 | -24 | -14 | 2 562 | -24 | -14 |
As % of net sales | 15.4 | 19.4 | 19.4 | ||||
(Loss)/income from associated companies | -3 | 2 | nm | nm | 14 621 | nm | nm |
Interest expense | -219 | -206 | -6 | -8 | -206 | - 6 | -8 |
Other financial income and expense | 14 | -42 | nm | nm | -26 | nm | nm |
Income taxes | -275 | -645 | 57 | 50 | -645 | 57 | 50 |
Net income | 1 466 | 1 671 | -12 | 2 | 16 306 | -91 | -90 |
Basic earnings per share (USD) | 0.69 | 0.75 | -8 | 7 | 7.29 | -91 | -89 |
Net cash flows from operating activities | 4 111 | 3 884 | 6 | 3 884 | 6 | ||
Free cash flow1 | 3 552 | 3 027 | 17 | 3 027 | 17 | ||
Core1 | |||||||
Core operating income | 4 030 | 3 819 | 6 | 15 | 3 819 | 6 | 15 |
As % of net sales | 31.8 | 28.9 | 28.9 | ||||
Core net income | 3 251 | 3 044 | 7 | 17 | 3 135 | 4 | 14 |
Core basic earnings per share (USD) | 1.52 | 1.36 | 12 | 23 | 1.40 | 9 | 19 |
- Constant currencies (cc), core results and free cash flow are non-IFRS measures. An explanation of non-IFRS measures can be found on page 50. Unless otherwise noted, all growth rates in this release refer to same period in prior year.
- A reconciliation of 2021 IFRS results and non-IFRS measures core results and free cash flow to exclude the impacts of the 2021 divestment of our Roche investment can be found on page 58 of the Condensed Financial Report. The free cash flow impact represents the dividend received in Q1 2021 from Roche in relation to the distribution of its 2020 net income.
nm = not meaningful
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Full year
Excluding Roche investment impacts2 | Reported | ||||||
FY 2022 | FY 2021 | % change | % change | FY 2021 | % change | % change | |
USD m | USD m | USD | cc1 | USD m | USD | cc1 | |
Net sales to third parties | 50 545 | 51 626 | -2 | 4 | 51 626 | - 2 | 4 |
Divisional operating income | 10 234 | 12 288 | -17 | -8 | 12 288 | -17 | -8 |
Corporate income and expense, | |||||||
net | -1 037 | -599 | -73 | -84 | -599 | -73 | -84 |
Operating income | 9 197 | 11 689 | -21 | -13 | 11 689 | -21 | -13 |
As % of net sales | 18.2 | 22.6 | 22.6 | ||||
(Loss)/income from associated companies | -9 | -2 | nm | nm | 15 339 | nm | nm |
Interest expense | -837 | -811 | -3 | -5 | -811 | - 3 | -5 |
Other financial income and expense | 20 | -96 | nm | nm | -80 | nm | nm |
Income taxes | -1 416 | -2 119 | 33 | 25 | -2 119 | 33 | 25 |
Net income | 6 955 | 8 661 | -20 | -9 | 24 018 | -71 | -67 |
Basic earnings per share (USD) | 3.19 | 3.86 | -17 | -7 | 10.71 | -70 | -66 |
Net cash flows from operating activities | 14 236 | 14 549 | -2 | 15 071 | -6 | ||
Free cash flow1 | 11 945 | 12 760 | -6 | 13 282 | -10 | ||
Core1 | |||||||
Core operating income | 16 665 | 16 588 | 0 | 8 | 16 588 | 0 | 8 |
As % of net sales | 33.0 | 32.1 | 32.1 | ||||
Core net income | 13 352 | 13 099 | 2 | 11 | 14 094 | -5 | 3 |
Core basic earnings per share (USD) | 6.12 | 5.84 | 5 | 14 | 6.29 | -3 | 6 |
- Constant currencies (cc), core results and free cash flow are non-IFRS measures. An explanation of non-IFRS measures can be found on page 50. Unless otherwise noted, all growth rates in this release refer to same period in prior year.
- A reconciliation of 2021 IFRS results and non-IFRS measures core results and free cash flow to exclude the impacts of the 2021 divestment of our Roche investment can be found on page 58 of the Condensed Financial Report. The free cash flow impact represents the dividend received in Q1 2021 from Roche in relation to the distribution of its 2020 net income.
nm = not meaningful
4
Strategy Update
Our focus
During 2022, Novartis unveiled a new focused strategy with our transformation into a "pure-play" Innovative Medicines business. We have a clear focus on five core therapeutic areas (cardiovascular, immunology, neuroscience, solid tumors and hematology), with multiple significant in-market and pipeline assets in each of these areas, that address high disease burden and have substantial growth potential. In addition to two established technology platforms (chemistry and biotherapeutics), three emerging platforms (gene & cell therapy, radioligand therapy, and xRNA) are being prioritized for continued investment into new R&D capabilities and manufacturing scale. Geographically, we are focused on growing in our priority geographies - the US, China, Germany and Japan.
Our priorities
- Accelerate growth: Renewed attention to deliver high-value medicines (NMEs) and focus on launch excellence, with a rich pipeline across our core therapeutic areas.
- Deliver returns: Continuing to embed operational excellence and deliver improved financials. Novartis remains disciplined and shareholder-focused in our approach to capital allocation, with substantial cash generation and a strong capital structure supporting continued flexibility.
- Strengthening foundations: Unleashing the power of our people, scaling data science and technology and continuing to build trust with society.
Sandoz planned spin-off
The planned spin-off remains on track for H2 2023. Completion of the transaction is subject to certain conditions, including consultation with works councils and employee representatives (as required), general market conditions, tax rulings and opinions, final Board of Directors endorsement and shareholder approval in line with Swiss corporate law. The transaction is expected to be tax neutral to Novartis.
Financials
Fourth quarter
Net sales
Net sales were USD 12.7 billion (-4%, +3% cc) in the fourth quarter driven by volume growth of 10 percentage points, partly offset by price erosion of 3 percentage points and the negative impact from generic competition of 4 percentage points.
Corporate income and expense, net
Corporate income and expense, which includes the cost of Group headquarter and coordination functions, amounted to an expense of USD 269 million compared to an expense of USD 292 million in the fourth quarter of 2021, mainly driven by prior year adjustments to provisions on M&A transactions partly offset by higher restructuring costs and lower contributions from the Novartis Venture Fund.
Operating income
Operating income was USD 1.9 billion (-24%,-14% cc), mainly due to higher restructuring costs (USD 0.6 billion), primarily related to the implementation of the previously announced streamlined organizational model. Operating income margin was 15.4% of net sales, decreasing by 4.0 percentage points (-3.2 percentage points cc).
Core operating income was USD 4.0 billion (+6%, +15% cc) driven by higher sales and productivity, including initial savings from the previously announced streamlined organizational model. Core operating income margin was 31.8% of net sales, increasing by 2.9 percentage points (+3.5 percentage points cc).
Income from associated companies
Income from associated companies was a loss of USD 3 million in the fourth quarter compared to an income of USD 14.6 billion in prior year and core income from associated companies was a loss of USD 3 million in the fourth quarter compared to an income of USD 93 million in prior year. These decreases were due to the divestment of our investment in Roche that closed in the fourth quarter of 2021 where a gain of USD 14.6 billion was recognized.
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Novartis AG published this content on 01 February 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 February 2023 06:17:10 UTC.