Zeneca reassurance on trading buoys shares: Analysts stand by forecasts after similar results predicted

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The Independent Online
SHARES in Zeneca, Imperial Chemical Industries' former bioscience arm, rose 11p to 819p after the company issued a reassuring trading statement that there had been no significant change in trading since the summer.

Pharmaceutical shares have been under pressure after poor figures recently from US drug companies. Zeneca's statement prompted a general firming of prices.

Analysts showed no inclination to alter noticeably their profit forecasts for 1993. Paul Diggle of Strauss Turnbull is retaining his figure of pounds 635m pre-tax.

Zeneca said aggregate trading performance in the second half of 1993 was better than last time around, but there had been no significant change since the interim results in July.

'There have been ongoing uncertainties in many healthcare markets, and gradual recoveries in the US and the UK, with most economies in Continental Europe remaining depressed. The favourable impact of movements in average rates of exchange decreased substantially versus the first half of 1993.'

Zeneca's pharmaceuticals arm showed an improvement in overall sales for the year at actual and constant exchange rates, despite the continuing decline of Tenormin, the beta-blocker heart drug that came off patent in the US last year.

Profits in the second half were expected to be ahead of the comparable period in 1992, although slightly lower than the first half of 1993.

The rate of growth for the full year was lower than the first half of 1993 as the second half of 1992 showed particularly strong growth in sales of its cardio-vascular Zestril and anti-cancer Nolvadex drugs.

Growth in sales of Zoladex, Zeneca's other anti-cancer treatment, continued broadly in line with the first half of 1993.

The growth of Diprivan, the anaesthetic, accelerated, reflecting the benefit of additional usage indications in the US.

Trading in the agrochemicals and seeds divison in the second half of 1993 followed the expected seasonal pattern, Zeneca said. European markets continued to be depressed by CAP reform.

'However, compared with the second half of 1992, the business performance has benefited from growth in southern hemisphere markets and a lower cost base.

'It is expected that these factors, together with exchange benefits, have combined to enable the business to break even in the second half of 1993 as compared with a loss in the second half of 1992.'

All markets remained competitive with continuing pressure on margins, Zeneca added.

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