Novartis on Thursday announced plans to separate its generic and biosimilar division, Sandoz, into a standalone entity by a 100% spin-off, to be listed in Zurich.
The Swiss-American pharmaceutical company said the split would results in the ‘number 1 European generics company and a global leader in biosimilars, and a more focused Novartis’.
Sandoz brought in some $9.6 billion in sales in 2021.
It plans for Sandoz to be incorporated in Switzerland, and be listed on the SIX Swiss Exchange, and in the US, with an American Depositary Receipt programme.
Sandoz is due for its next ‘wave of growth’, with its existing biosimilars pipeline of 15 plus molecules, the firm said. It would be targeting an investment grade credit rating to fund its growth plans, and deliver ‘attractive’ dividends.
‘Novartis aims to become a focused innovative medicines company with a stronger financial profile, and improved return on capital,’ it explained.
Completion of the spin-off is targeted for the second half of 2023.
Novartis shares were up 0.7% in Zurich early Thursday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.6% at 7,517.24
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Hang Seng: up 3.2% at 19,876.09
Nikkei 225: closed up 0.6% at 28,479.01
S&P/ASX 200: closed up 0.7% at 7,048.10
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DJIA: closed up 59.64 points, or 0.2% at 32,969.23
S&P 500: closed up 12.04, or 0.3% at 4,140.77
Nasdaq Composite: closed up 50.23 points, or 0.4%, at 12,431.53
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EUR: up at $1.0021 ($0.9981)
GBP: up at $1.1852 ($1.1813)
USD: down at JP¥136.55 (JP¥136.80)
Gold: up at $1,759.80 per ounce ($1,752.55)
Oil (Brent): up at $101.90 a barrel ($100.77)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday’s key economic events still to come
Jackson Hole economic policy symposium gets underway.
1000 CEST Germany business climate index
1330 CEST EU ECB monetary policy meeting accounts
1100 BST UK CBI distributive trades survey
1100 BST Ireland labour force survey
0830 EDT US unemployment claims
0830 EDT US gross domestic product
1030 EDT US EIA natural gas storage report
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The German economy grew slightly in the second quarter, revised figures from the country’s statistics office showed. German gross domestic product grew 0.1% in the second quarter from the first. Whilst slowing from 0.8% quarter-on-quarter growth in the first quarter, the figure was better than expected, improving from Destatis’ preliminary estimate of no growth whatsoever. On a price-adjusted annual basis, GDP grew 1.8% in the second quarter, compared to 3.9% in the first quarter. This was an improvement from initial estimates of 1.5%.
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Nearly 290,000 seats have been cut from UK bank holiday flight schedules in recent weeks, according to new analysis. Aviation data company Cirium said around 900 flights due to depart from UK airports between Friday and Tuesday have been removed from schedules since the start of July. Cirium said the number of outbound flights over the August bank holiday period is 21% below 2019 levels. British Airways has made the largest cut since July 1, with nearly 380 departures scrapped. Flybe has removed more than 130 outbound flights from its schedules, while easyJet has axed around 90 flights. The number of cancelled inbound flights between Friday and Tuesday is also around 900, meaning the total number of seats on aircraft serving UK airports is approximately 288,000 fewer than planned.
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BROKER RATING CHANGES
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Berenberg cuts Biffa to ’hold’ (’buy’) - target 415 (465) pence
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Berenberg cuts Marshalls price target to 400 (620) pence - ’hold’
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Berenberg raises Kosmos Energy to ’buy’ (’hold’) - target 710 (670) pence
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RBC starts Digital 9 Infrastructure with ’outperform’ - price target 145 pence
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COMPANIES - FTSE 100
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Irish building materials firm CRH raised its dividend after robust half-year results, though it said it contended with a challenging inflationary cost backdrop. For the six months to June 30, revenue was $15.0 billion, up 14% from $13.2 billion last year and pretax profit rose 29% to $1.2 billion from $929 million. First-half earnings before interest, tax, depreciation and amortisation was $2.2 billion, up 22% from $1.8 billion the year before. The Dublin-based company declared a 24.0 US cents interim dividend, up 4.3% on 23.0 US cents in the prior year. Looking ahead, CRH expects annual Ebitda to be $5.5 billion, up 10% from $5.0 billion in 2021, in a ‘challenging cost environment’. CRH also said its acquisition pipeline remains strong and its ‘significant’ balance sheet capacity provides flexibility to capitalise on opportunities to deliver further value for shareholders. ‘CRH has delivered another strong performance with further growth in sales, Ebitda and margin despite a challenging and volatile cost environment,’ said Chief Executive Officer Albert Manifold.
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COMPANIES - FTSE 250
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Harbour Energy also said it delivered a strong first-half performance, helped by an increase in oil and gas prices, as the North Sea-focused firm increased its shareholder returns. For the six months to June 30, revenue and other income was $2.67 billion, surging from $1.50 billion last year and pretax profit was $1.49 billion, multiplied from $120.2 million. Crude oil sales amounted to $1.54 billion, up from $897 million last year, with a post-hedge realised price of $82 per barrel of oil equivalent, up from $58 the year prior. Turning to returns, Harbour had initiated a $200 million share buyback in June and on Thursday increased this to $300 million. ‘We are financially strong and have continued to deleverage our balance sheet at pace. As a result, we have significant optionality over our future capital allocation including for continued organic investments, meaningful M&A and additional shareholder returns,’ said Chief Executive Officer Linda Cook.
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Building products supplier Grafton raised its interim dividend and said it expects an annual performance in line with expectations. For the six months to June 30, revenue was £1.15 billion, up 12% from £1.03 billion last year but pretax profit was £132.4 million, down 7.3% from £142.9 million. Grafton raised its interim dividend 8.8% to 9.25p from 8.50p last year. Looking ahead, Grafton expects full-year adjusted profit expected to be in line with analyst consensus. CEO Gavin Slark commented: ‘Our first half performance saw a significant normalisation of activity levels following exceptional pandemic related spikes in trading in the first half of 2021. While inflation remains a continuing feature in our markets, we saw improved supply chain consistency as trading patterns normalised and building materials shortages eased.’
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COMPANIES - GLOBAL
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Australia’s Qantas Airways said its business had started to bounce back after three years of pandemic turmoil, which cost the airline $17 billion in revenue. ‘These figures are staggering and getting through to the other side has obviously been tough,’ Chief Executive Alan Joyce said. ‘We always knew travel demand would recover strongly, but the speed and scale of that recovery has been exceptional.’ By the end of June, domestic travel was above pre-pandemic levels, Qantas reported, with 20 new routes added to meet demand for leisure travel around Australia. A sluggish rebound in international travel – still lagging below 50% of pre-pandemic highs – was ‘offset by a record performance’ in the group’s freight business. But the fourth quarter travel surge was not enough to make up for a year plagued by Omicron and Delta wave lockdowns, which caused a third straight loss before tax of A$1.19 billion, about $830 million.
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Thursday’s shareholder meetings
Ince Group PLC - GM fundraising
McBride PLC - GM increase in borrowing limit
NatWest Group PLC - GM re approval of special dividend
Nuformix PLC - AGM
Triple Point Energy Efficiency Infrastructure Co PLC - AGM
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