* 2013 sales rise 3 pct to 46.78 billion Sfr
* FY net profit 11.373 bln Sfr vs 11.626 bln in poll
* To pay 7.80 Sfr per share dividend for 2013
* Expects low-to-mid single digit sales growth in 2014
By Caroline Copley
BASEL, Jan 30 Roche offered
shareholders a lower-than-expected dividend payout after
reporting an 18 percent rise in full-year net profit,
potentially a sign the Swiss pharmaceuticals group might be
keeping its cash for deals.
Roche - the world's largest maker of cancer drugs - has a
track record of solid profit growth prompting expectations of a
more generous dividend, share buyback or M&A.
It said on Thursday it planned to pay a dividend of 7.80
Swiss francs per share, up 6 percent over the previous year, and
would keep hiking payouts. But this fell short of the mean
estimate of 7.98 Swiss francs in a Reuters poll.
Roche's reluctance to offer a sweetener to shareholders in
the form of a special dividend or stock buyback contrasts with
cross-town rival Novartis, which announced a $5
billion share buyback programme last year.
Kepler Cheuvreux analyst Fabian Wenner said investors were
likely to be disappointed, given Roche would have net cash - a
measure of cash on financial statements after subtracting
current liabilities - by mid-year.
"That raises the question as to what they are going to do
with it? The only sensible assumption is that they are preparing
a deal, otherwise what are they going to do with the money?"
Roche's net debt stood at 6.7 billion francs by the end of
2013 and it has now paid off around two-thirds of its $46.8
billion purchase of Californian biotech firm Genentech in 2009.
Chief Executive Severin Schwan said the group's net debt to
assets ratio of 11 percent at the end of last year was back in
its target corridor of zero to 15 percent. But he said this was
still above average compared to peers in the industry.
He declined to say how the company might use its cash if it
could not find a suitable acquisition to spend the money on.
"The question is always of course ... M&A and that will very
much depend on the opportunities coming up," Schwan told
reporters. "But our strategy has not changed at all, we will
continue to look out for bolt on acquisitions."
He said Roche was interested in adding to its pipeline in
its pharmaceuticals division as well as buying technologies for
its diagnostics unit, but did not give any price range.
Since buying Genentech, the drugmaker has earned a
reputation as a disciplined acquirer, prepared to walk away from
potential deals rather than overpay.
In 2012, Roche abandoned an attempt to buy Illumina
for $6.7 billion after shareholders in the U.S. gene-sequencing
company held out for a higher price. Last year, Roche was said
to be seeking financing for a potential bid for rare disease
treatment specialist Alexion, but no deal has materialised.
STRONG SWISS FRANC
Roche's full-year sales rose 3 percent to 46.78 billion
Swiss francs ($52.22 billion), in line with forecasts, and
driven by strong demand for both its older and newer cancer
medicines as well as its rheumatoid arthritis medicine Actemra.
Net profit rose 18 percent to 11.373 billion francs, missing
the average analyst forecast for 11.626 billion in a Reuters
poll. The figures were hit by currency swings, with Roche
particularly hurt by a weakening of the Japanese yen against the
Swiss franc. Chief Financial Officer Alan Hippe said the
emerging market currency weakness would likely be a drag on
Citi analyst Andrew Baum said the negative currency impact
overshadowed otherwise robust fundamentals. He expects foreign
exchange swings to shave 6 percent off core earnings per share
this year, if current exchange rates persist.
Roche guided for 2014 sales to grow in the low-to-mid single
digits percent, while core earnings per share (EPS) should grow
ahead of sales. It expects the loss of exclusivity on
chemotherapy drug Xeloda - its fifth biggest seller with sales
of 1.5 billion francs last year - to drag on growth.
Roche has pushed ahead with plans to develop "follow on"
medicines which it hopes will replace or breathe new life into
older treatments. It is banking on a strong ramp-up of these
products to defend its market share once copycat versions of
biotech drugs known as "biosimilars" arrive.
This strategy showed it was bearing fruit on Thursday, as
sales of Perjeta, a treatment for women with a particularly
aggressive form of breast cancer, rose nearly five-fold to 326
million francs, from 56 million a year ago.
Shares in Roche, which rose 35 percent last year, were
trading down 0.6 percent at 238.4 francs by 1040 GMT, compared
to a flat European healthcare sector index.