Novartis (SWX: NOVN) Reports Robust Q2 Growth, Raises FY 2024 Guidance

July 19, 2024 04:07 PM AEST | By Team Kalkine Media

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Novartis (SWX: NOVN) Reports Robust Q2 Growth, Raises FY 2024 Guidance — Image source: shutterstock

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Novartis (SWX: NOVN) has delivered strong financial results in the second quarter of 2024, leading to a raised full-year bottom-line guidance. The company achieved notable increases in net sales and core operating income, highlighting the success of its key products and strategic initiatives.

Strong Sales Performance

In Q2, Novartis' net sales grew by 11% at constant currencies (cc) and 9% in USD, reflecting the robust performance of its leading pharmaceuticals. Key products such as Entresto, Kesimpta, Cosentyx, Kisqali, Leqvio, and Pluvicto showed significant sales growth. Entresto's sales increased by 28% (cc), Kesimpta by 65% (cc), Cosentyx by 22% (cc), Kisqali by 50% (cc), Leqvio by 134% (cc), and Pluvicto by 44% (cc). This impressive performance across the portfolio underscores Novartis' ability to innovate and meet market demands.

Operating Income and Core Margin Expansion

The company also reported a 47% growth in operating income at constant currencies (43% in USD), with net income rising by 49% (cc) and 43% (USD). Core operating income saw a substantial increase of 19% (cc) and 17% (USD), resulting in a core operating income margin of 39.6%, up 270 basis points (cc). This margin expansion was primarily driven by higher net sales, reflecting the company's operational efficiency and strategic focus on high-growth areas.

Earnings and Cash Flow

Novartis' core earnings per share (EPS) grew by 21% (cc) and 17% (USD), reaching USD 1.97 in Q2. The company also generated a free cash flow of USD 4.6 billion, marking a 40% increase in USD terms. This increase was driven by higher net cash flows from operating activities, showcasing Novartis' strong cash generation capabilities and financial health.

Half-Year Performance and Raised Guidance

For the first half of 2024, Novartis reported an 11% increase in sales at constant currencies (9% in USD) and a 21% rise in core operating income (16% in USD). This consistent growth reflects the company's strong market position and effective execution of its strategic priorities.

Given the strong momentum, Novartis has raised its full-year 2024 guidance for core operating income. The company now expects core operating income to grow in the mid- to high-teens, while net sales are projected to increase in the high single to low double digits, remaining unchanged from previous guidance.

Strategic Outlook

Novartis' continued strong performance highlights its commitment to driving innovation and delivering value to shareholders. The success of its key products, coupled with effective cost management and operational efficiencies, positions the company for sustained growth. As Novartis navigates the evolving healthcare landscape, its strategic focus on high-growth areas and new product launches will be crucial in maintaining its competitive edge and achieving long-term success.

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