2024-02-01 22:52:09 ET
Start Time: 09:30
End Time: 11:31
Roche Holding AG (RHHBY)
Q4 2023 Earnings Conference Call
February 01, 2024, 09:30 AM ET
Company Participants
Thomas Schinecker - CEO Roche Group
Teresa Graham - CEO Roche Pharmaceuticals
Matt Sause - CEO Roche Diagnostics
Alan Hippe - Chief Financial and Information Officer
Bruno Eschli - Head of IR
Conference Call Participants
Charlie Mabbutt - Morgan Stanley
Richard Parkes - BNP Paribas.
Simon Baker - Redburn
Matthew Weston - UBS
Sachin Jain - Bank of America
Emmanuel Papadakis - Deutsche Bank
John Priestner - JP Morgan
Presentation
Operator
Ladies and gentlemen, welcome to Roche's Full Year Results Webinar 2023. My name is Hendrik, and I'm the technical operator for today's call. Kindly note that the webinar is being recorded. I would like to inform you that all participants are in listen-only mode during the call. After the presentation, there will be a question-and-answer session. [Operator Instructions]. One last remark, if you would like to follow the presented slides on your end as well, please feel free to go to roche.com/investors to download the presentation.
At this time, it's my pleasure to introduce you to Thomas Schienecke, CEO of Roche Group. Mr. Schienecke, the stage is yours.
Thomas Schinecker
Thank you very much. Hello, and welcome and I look forward to sharing our full year 2023 results with you. In 2023, we managed to exceed our guidance. As you see on the right-hand side, the group sales growth increased by 1% in constant exchange rates. And this is despite significant headwinds from COVID-19 and also by similar erosion. In total, headwinds of about 6.4 billion or more than 10% of our sales. And we managed to grow through that. As the headwinds will become less for us in 2024, and we have a strong underlying business, this underlying business will shine through in 2024. And you'll see in the guidance, we do expect good growth for 2024.
Core EPS, we also exceeded our guidance by reaching 6% growth at constant exchange rates. Now we had a one-time positive effect due to the resolution of a tax dispute. And even without this effect, we grew our core EPS in line with our group sales at 1%, again, exceeding our guidance. And with that, we managed to further increase our dividends to CHF 9.60. So overall, I mentioned a strong growth of 1% that is really supported by a very strong base business growth of 8%. The base business growth is excluding COVID-19.
Pharma grew a strong 9% and diagnostic at 7% in the base business. We had the expected COVID-19 sales decline of CHF 4.3 billion and AHR of CHF 1.1 billion. On top of that, we had to compensate for decline in LUCENTIS and Esbriet as well due to biosimilar and genetics erosion, really showing that the strong underlying business made us grow this year despite these headwinds. The core operating margin stable, core EPS plus 6%, operating free cash flow plus 4%, all at constant exchange rates.
We've achieved a number of very important key milestones in Q4, the approval of Vabysmo in RVO and Tecentriq as subcuts, the U.S. priority review granted for Xolair in food allergy. We've had a number of positive Phase 3 readouts. One that I would like to highlight is the readout for inavolisib that Teresa will also cover. Really fantastic results and this means we're going to launch this medicine hopefully already this year.
We've also had very good results in Xolair in food allergy. We've had a number of launches on the diagnostic side, but also a number of deals for pharma; Telavant, the anti-TL1A, Carmot, the dual GLP-1/GIPs and LumiraDx, really a revolutionary point of care technology.
We have significant news flow in 2024. On the diagnostic side, let me say with MassBank with the Accu-Chek SmartGuide, the CGM, c703, updates to cobas 6800/8800, cobas pro serology solution, et cetera, we will have the biggest launch year for diagnostics in the history of this division.
On the pharma side, we have a number of Phase 3 readouts. Let me call out specifically Gazyva in lupus nephritis, but also we have a number of Phase 3 enabling readouts. We have in total 12 NMEs that could potentially transition into a Phase 3 during this year. Now, again, let me highlight on this slide the strong achievements of the organization, growing 1% at constant exchange rates. If we exclude COVID-19, you see the strong 8% growth.
On this slide, you see the different movements of the sales lines. The dia-based business growing 1 billion. There are actually not that many diagnostics companies that are even the size of 1 billion, and we add that every year. That's the underlying base business growth of 7%.
You see the expected COVID-19 impact. As I mentioned before, this impact will be easing. We have a strong growth of our new portfolio in pharma, and we have the expected impact in Ronapreve and AHR. And here, you also see the appreciation of the Swiss francs versus other currencies, specifically in Q4 accelerated. ...
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Roche Holding AG (RHHBY) Q4 2023 Earnings Call Transcript