UPDATE 2-UCB 2007 net hit by Schwarz buy, repeats outlook

(Adds analyst comment, CEO)

By Philip Blenkinsop

BRUSSELS Feb 29 (Reuters) - Belgian pharmaceutical group UCB (UCB.BR) reported a sharp decline in 2007 net profit on Friday, albeit better than expectations, hit by charges related to its purchase of German peer Schwarz Pharma.

UCB, with blockbuster allergy and epilepsy drugs, said net profit fell 59 percent to 160 million euros ($241.6 million) from a pro-forma 391 million euros, coming in above the average forecast of 127 million euros from a Reuters poll of 11 analysts.

Growth was predominantly from epilepsy drug Keppra, with sales rising 35 percent to 1.03 billion euros, while costs attached to the Schwarz merger and marketing expenses drew down the bottom line.

UCB said in December it expected revenue to slightly beat last year's pro-forma figure, and recurring EBITDA (earnings before interest, tax, depreciation and amortisation) to top 720 million euros.

Revenues in fact were unchanged at 3.6 billion euros, versus expectations of 3.5 billion in the poll, and EBITDA was 741 million euros.

"The results seem fairly good. Net profit was higher than expected and Keppra sales very good," said Tim Heirwegh, analyst at Fortis.

UCB achieved 166 million euros of synergies from integrating Schwarz in 2007. In a brief conference call, Chief Executive Roch Doliveux repeated the 380 million euro target by 2010 and said that synergy benefits should reach 290 million euros in 2008.

The company repeated its forecast of a revenue fall this year to 3.4 billion euros, due to the patent expiry of antihistamine Zyrtec and the start of generic competition for Keppra. Recurring EBITDA would drop to about 650 million euros and net profit would again top 100 million euros.

UCB raised its proposed gross dividend to 0.92 euros per share from 0.90 euros a year ago.

UCB suffered a setback last year after the U.S. Food and Drug Administration refused to approve the use of would-be blockbuster Cimzia to treat Crohn's Disease and after a panel of European medical experts issued a negative opinion on it.

Rivals have received clearance for Crohn's treatments. (Reporting by Philip Blenkinsop; Editing by David Cowell/Rory Channing)