Zeneca suffers a pounds 112m triple blow

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The Independent Online
A "TRIPLE WHAMMY" of sterling strength, the Asian crisis and the year 2000 computer bug wiped pounds 112m off Zeneca's first-half profits, the pharmaceutical group revealed yesterday.

The factors were behind a 2 per cent slide in interim pre-tax profits to pounds 654m despite a 5 per cent rise in sales to pounds 2.90bn, the drugs group said. The interim dividend rose to 14p per share from 13.5p a year ago.

A worse-than-expected hit from sterling accounted for most of the downturn, cutting profits by pounds 81m, compared with City predictions of a pounds 65m impact. After stripping out the effect of sterling, profits had risen 10 per cent with sales up by 11 per cent, said Zeneca.

The maker of best-selling drugs such as the asthma treatment Accolate and the hypertension compound Zestril warned that sterling would be a major factor for the rest of the year, and forecast a pounds 110m currency loss for the whole of 1998.

The drugs group, the focus of takeover speculation in the past 12 months, said the year 2000 computer problem was responsible for a further pounds 20m blow. Millennium compliance costs would total pounds 45m in 1998. The slowdown in the South-east Asian economies wiped a further pounds 11m off group profits.

"Currency effects and the Year 2000 in total accounted for more than pounds 100m [in lost profits] and affected all of the group's key financial figures," Sir David Barnes, the chief executive, said. But he said the company's underlying earnings were growing at a healthy rate and Zeneca was on course to meet its target of 15 per cent yearly profit growth.

Sir David dismissed talk of a takeover, saying the company had received no approaches. Several drug giants, including Astra of Sweden, have been linked with the British group.

The company is close to receive US regulatory approval for its cancer treatment, Nolvadex, to be used in the prevention of breast cancer.

The shares closed 15p up at 2,280p.

Investment column, page 21