Novartis's revenue and market capitalization

  •   DEHOUI Lionel

Founded in 1996, Novartis is a pharmaceutical company headquartered in Basel, Switzerland. It is one of the world's leading companies in the development, manufacture and marketing of pharmaceuticals. The company employs innovative scientific and digital technologies to create transformative treatments in areas of growing medical need. In 2020, the company performed well, despite the challenges posed by the coronavirus health crisis. Details of its annual results in this article

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Novartis's revenue and market capitalization
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Fourth quarter 2020 results

In the last three months of 2020, Novartis reported net sales of $12.8 billion. This is up 3% (1% cc) compared to Q4-2019. Operating income rose 45% (51% cc) to $2.6 billion in the quarter.

In Q4 2020, the company reported net income of $2.1 billion, up 86% (93% cc) from the same time last year. EPS was $0.92, up 84% (93% cc) year-on-year.

In Q4-2020, core operating income reached $3.5 billion. It increased by 1% (2% cc) compared to the last quarter of 2019. Core operating profit margin was 27.4% of sales. It fell by 0.5 percentage points. At cc, it improved by 0.4 percentage points.

Core net income was USD 3.0 billion in Q4-2020. Core net income increased by 2% (3% cc) year-on-year. For the quarter as a whole, the group generated free cash flow of $3.3 billion, up from $3.5 billion a year earlier.

 

Annual performance of financial indicators in 2020

For the full 12 months of fiscal 2020, Novartis reported net sales of $48.66 billion, up from €47.44 billion in 2019. It reported year-on-year growth of 3%. This performance was mainly driven by Entresto, Zolgensma and Cosentyx. Volumes contributed 9 percentage points to the sales increase.

For the year 2020, the pharmaceutical group recorded an operating profit of USD 10.2 billion, compared to USD 9.1 billion the previous year. This represents a year-on-year increase of 12% (19% cc). The increase was driven by higher sales and productivity. This also includes a reduction in expenses.

In 2020, the company generated a net profit of $8.1 billion, compared to $7.1 billion in 2019, an increase of 13% (20% cc). This was driven by higher operating income. EPS was $3.55, up from $3.12 the year before. This was 14% (21% cc) higher than in 2019.

Core operating profit came in at $15.4bn in 2020, up from $14.1bn in 2019. Core operating profit increased 9% (13% cc) year-on-year, driven by sales growth and improved gross margin and productivity. Core operating margin was 31.7% of net sales, an increase of 2.0 percentage points. On a cc basis, it increased by 2.8 percentage points.

Core net income was USD 13.2 billion in 2020, compared to USD 12.1 billion in the previous year. Core net income increased by 9% (12% cc) year-on-year. This performance was mainly driven by the increase in core operating income.

For the full year 2020, the company posted free cash flow of USD 11.7 billion, compared to USD 12.9 billion a year earlier.

 

Financial structure at the end of 2020

One of the priorities of the Novartis Group is to maintain the right balance of investment in its businesses, a strong financial structure and attractive returns for its shareholders. In 2020, the pharmaceutical giant repurchased a total of 32.6 million shares.

This transaction is valued at USD 2.9 billion. The transaction took place on the second trading line of the Swiss Exchange (SIX Swiss Exchange). As of 31 December 2020, the company had net debt of $24.5 billion, compared to $15.9 billion at the end of 2019.

This increase is mainly due to the acquisition of The Medicines Company for $9.6 billion. It is also the result of the distribution of the annual dividend, which amounted to 7 billion dollars. The increase in net debt in 2020 was also due to net cash outflows from treasury stock transactions, which are estimated at $2.1 billion.

However, the increase in net debt was partially offset by the free cash flow (USD 11.7 billion) recorded during the year. In addition, it should be noted that the company did not have any cash flow or liquidity problems in the 2020 financial year. This was due to the coronavirus health crisis.

 

About the Novartis dividend and market capitalisation

The Novartis Group is one of the companies in the pharmaceutical sector that pays a coupon to its shareholders at the end of each financial year. For the year 2020, it has not failed to sacrifice this tradition.

In this context, the Board of Directors of the company has proposed to pay a dividend of CHF 3.00 per share for this financial year. This is an increase of 1.7% compared to the amount distributed in 2019 (CHF 2.95 per share). This is the 24th consecutive increase since the Group's inception.  

Moreover, Novartis shares are not leaving investors in the financial markets unmoved. Indeed, the company has a remarkable presence on the stock markets. It is listed on the Swiss market of the Six Swiss Exchange. It is also a constituent of the Stoxx Europe 50 stock market index. As of November 2021, its market capitalisation is estimated to be more than USD 170 billion.

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