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Novartis delivered solid sales growth, margin expansion and pipeline progress in 2014; portfolio transformation will focus company on leading businesses

Basel, January 27, 2015 - Commenting on the results, Joseph Jimenez, CEO of Novartis, said: "2014 was a transformational year for Novartis. We improved our execution, while taking steps to focus the company on our three leading businesses with global scale. We delivered solid sales growth with margin expansion, strengthened innovation, and advanced our quality and productivity agendas. I'm confident that we are positioned for future success."

  • Net sales grew in FY 2014, with strong core[1] margin expansion
    • Net sales increased 1% (+3% cc[1])[2] to USD 58.0 billion in FY (Q4: -2%, +4% cc)
    • Operating income grew 1% (+7% cc) to USD 10.7 billion in FY
    • Net income up 12% (+19% cc) to USD 10.3 billion in FY
    • Core operating income in FY (+3%, +8% cc) drove 120 basis points of core margin expansion (cc)
    • Core EPS was USD 5.23 (+4%, +10% cc) in FY
    • Free cash flow[1] was USD 10.8 billion (+12%) in FY
  • Strong innovation momentum continues from Q4
    • Cosentyx approved in US and EU for psoriasis; in Japan for psoriasis and psoriatic arthritis
    • Signifor long-acting release formulation approved in US and EU for acromegaly
    • Files submitted for LCZ696 in US and EU, and for QVA149 and NVA237 in US
    • FDA Advisory Committee recommended approval for Sandoz biosimilar filgrastim
  • Growth Products[3] and Emerging Growth Markets[3] continued to drive performance in Q4
    • Growth Products grew 14% (USD) to USD 4.7 billion, or 32% of Group net sales
    • Strong performance in Emerging Growth Markets (+12% cc)
  • Continued progress in transforming portfolio and increasing productivity
    • Divestment of Animal Health Division to Eli Lilly and Company completed on January 1, 2015
    • Implementation of Novartis Business Services on track
    • Core margin (+1.2 percentage points cc) improved mainly due to ongoing productivity initiatives
  • Dividend of CHF 2.60 per share, up 6%, proposed for 2014
  • Outlook 2015 for continuing operations:
    • Net sales expected to grow mid-single digit (cc); core operating income expected to grow ahead of sales at a high-single digit rate (cc)
    • Outlook based on modeling assumption that GSK transactions will close on March 31, 2015[4]

Read the media release (PDF)

References:

[1] Constant currencies (cc), core results, free cash flow and 2013 data excluding the blood transfusion diagnostics unit are non-IFRS measures. An explanation of non-IFRS measures can be found on page 54 of the Condensed Financial Report (CFR).
[2] All comparisons to prior year are based on 2013 data excluding the blood transfusion diagnostics unit. See page 85 of the CFR.
[3] Growth Products are defined on page 2, and Emerging Growth Markets are defined on page 9.
[4] Forecast assumption for modeling purposes only. Novartis continues to expect the GSK transactions to be completed in the first half of 2015.