August 21, 2019 / 5:10 AM / a month ago

UPDATE 2-Big loss shows Alcon's turnaround a work in progress

* Q2 net loss $390 mln vs profit of $15 mln a year earlier

* Results affected by tax and amortisation hits

* Shares fall as much as 2.9% (Recasts first paragraph, adds comment from analyst)

By John Miller

ZURICH, Aug 21 (Reuters) - Alcon posted a big second-quarter loss, showing the Swiss-listed eye care company’s pursuit of a turnaround remains a work in progress following its spin-off from Novartis earlier this year.

Alcon reported on Tuesday a net loss of $390 million, or 80 cents per share, for the three months ended June 30, compared with net income of $15 million, or 3 cents per share, in the previous year.

Net sales rose 5% in constant currencies to $1.86 billion, in line with the $1.87 billion estimate in a Refinitiv poll.

The Geneva-headquartered company booked a $294 million second-quarter tax hit, up from just $9 million in the year-earlier period, after it was forced to re-evaluate deferred tax assets and liabilities in its home country when Swiss voters approved tax reforms on June 30.

The results were also dragged down by $258 million from amortisation of intangible assets and a $78 million bill from its separation from Novartis.

“Alcon ... showed no meaningful margin improvements and margins are on a year-on-year decline since the third quarter of 2018,” Bank Vontobel analyst Daniel Buchta wrote in a note to investors. “Top-line issues thus seem to be solved, but the profitability is certainly not yet.”

The shares fell as much as 2.9%, trimming a nearly 10 percent increase since their listing in April following the spin-off from Novartis.

Under Novartis, Alcon struggled in recent years with moribund sales that required significant investments in marketing and sales staff, affecting profitability.

Alcon is now introducing new products, including daily disposable lenses next month, as it seeks to buttress its position as the biggest ophthalmic surgery device maker and No. 2 maker of contact lenses and solutions behind Johnson & Johnson .

Alcon confirmed its full-year guidance for 3-5% revenue growth, based on constant currency rates, and expects a core operating margin of 17-18%. (Reporting by John Miller in Zurich and Rama Venkat in Bengaluru; Editing by Lisa Shumaker and Mark Potter)

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