Jordanian drugmaker Hikma’s full-year profit, revenues hit expectations

Hikma posted 2017 generics revenue of $615 million, surpassing its expectation of about $600 million. (Reuters)
Updated 14 March 2018
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Jordanian drugmaker Hikma’s full-year profit, revenues hit expectations

BENGALURU: Hikma Pharmaceuticals reported full-year profit and revenue largely in line with expectations, aided by strong performance in the second half of the year.
The company has struggled due to persistent price pressures in the US market and was forced to cut revenue guidance for its generics business thrice in 2017.
Hikma’s problems were further compounded by a delay in the launch of its generic version of GlaxoSmithKline’s blockbuster lung drug Advair. The US Food and Drug Administration on Monday asked Hikma to conduct a further clinical study evaluating the drug.
Hikma posted 2017 generics revenue of $615 million, surpassing its expectation of about $600 million.
The company, which named former Teva Pharmaceutical generics head Sigurdur Olafsson as its CEO in a bid to improve the business, forecast revenue from generics in 2018 to be in the range of $550 million to $600 million.
“We see these results as reassuring in the context of poor market sentiment and multiple headwinds to the business and would expect a positive reaction,” Morgan Stanley analysts wrote in a note.
Hikma shares rose as much as 10.7 percent in early trading.
The Jordan-based drugmaker said earnings before interest, tax, depreciation and amortization fell 5 percent to $468 million for the year ended December 31, but was largely in line with analysts’ estimate of $469.9 million, according to Thomson Reuters.
Revenue fell marginally to $1.94 billion, also keeping with estimates.


Dubai property developers put bond plans on hold

Updated 58 min 49 sec ago
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Dubai property developers put bond plans on hold

  • Dubai property prices have fallen since a mid-2014 peak, hurt by a period of weak oil prices and muted sales
  • Residential prices fell 6 to 10 percent in 2018 and are expected to drop 5 to 10 percent more this year

DUBAI: Dubai’s Emaar Properties and state-owned developer Nakheel have put on hold plans to issue US dollar-denominated bonds, Emaar and sources familiar with the bond issues said, amid a real estate downturn and volatility in emerging markets.
Emaar told Reuters that it had put on hold a planned bond issue, blaming rising interest rates but did not elaborate. Nakheel declined to comment.
Three financial sources said the firms had planned dollar-denominated sukuk, or Islamic bonds, and would have had to pay a yield premium to attract enough investors due to concerns about Dubai’s property price slide and emerging market volatility.
Dubai property prices have fallen since a mid-2014 peak, hurt by a period of weak oil prices and muted sales, although the slide has not come close to the more than 50 percent plunge seen in 2009-2010, which pushed Dubai close to a debt default.
Residential prices fell 6 to 10 percent in 2018 and are expected to drop 5 to 10 percent more this year, according to Savills. The drop has hurt developer earnings.
Emaar, developer of Burj Khalifa, the world’s tallest building, reported a 29 percent fall in the third quarter last year, while Dubai’s second-largest listed developer DAMAC reported a 68 percent drop.
The financial sources said Emaar and Nakheel hired banks a few months ago to issue Islamic bonds but shelved the plans.
An Emaar spokesperson said its decision to put its plan on hold was not linked to the property market performance.
“The bond was considered more than a year ago and was put on hold due to increasing interest rates. The decision was not based on market conditions,” the spokesperson said.
Dubai government owns a minority stake in Emaar.
Nakheel, developer of palm shaped islands off Dubai, was one of the worst hit by Dubai’s 2009-2010 real estate crash, forcing it into a massive debt restructuring. It has not issued public debt since it nearly defaulted in 2009.
The market downturn has put pressure on property companies’ existing bonds, which investors use as a parameter to establish the price of new debt sales from borrowers in the same sector.
In secondary debt markets, yields of bonds issued by Dubai developers have risen significantly over the past few months, underperforming corporate debt from other sectors.
DAMAC’s $500 million sukuk due in 2022 and $400 million Islamic paper due in 2023 saw their yields spike by over 200 bps and 150 bps, respectively, since early November.
BofA Merrill Lynch last week forecasted weaker booked sales and gross margin for DAMAC, saying it was likely to be pressured by the property market and upcoming debt and land payments.
DAMAC did not immediately respond to a request for comment.
Yields on a $600 million sukuk issued by private developer Meraas, due in 2022, have jumped by around 120 basis points in the same period. Meraas declined to comment on the move.