E Danish CEOs

Free cash flow is now anticipated at DKK29-33 bn this year, up from earlier forecasts by the company of DKK 27-32 bn. It upped its growth sales estimates for the full year to 4-5% vs an earlier level of 3.5%, both in local currencies.l Its operating profits estimates were confirmed at 2-5% for the year. It renewed its share buyback program and added another DKK 1 bn, bringing the total to DKK 15 bn going forward. The big problem, in fact, is US sales of diabetes meds.

CEO Lars Fruergaard Jørgensen stated in a TV interview that most of the job cuts are done, and that it will gain against Eli Lilly in diabetes meds. He also said that inventories are being stockpiled in Britain in case there is a no deal Brexit. All this created headlines which did not reflect NVO's results

*The second Danish-headed company is Israeli Teva whose CEO is a rare extrovert Dane, Kåre Schultz who took command of the conference call and claimed credit for cutting spending by the company by $1.8 bn YTD and to get to $3 bn by the end of 2019. He also raised full year guidance. And dazzled the analysts by using a new and non-comparable geographic presentation of its financial results: North America; Europe; and rest of the world, including Israel itself.

Here too manning levels have been cut, by 9000 employees out of a planned 14,000 by the end of next year. TEVA is cutting its debt burden which is expected to fall to $27.6 bn at the end of the year from $31.5 bn,

Teva sales beat consensus at $4.53 bn, but were down overall by 10%. The GAAP loss was $273 mn, vs a profit of $530 mn a year before.

Here too it was the North American market (including Mexico and Canada as well as the US) which cratered. Sales were $2.265 bn y/y vs $3.043 bn in 2017, down 26% blamed on Copaxone going off-patent. Gross profits lagged even more, off by a third to $1.232 bn, and even R&D was cut by 10%, a nono in normal drug company presentations. Yet in the end, North American profits excluding items and amortization fell by 45% to $649 mn y/y. US revenues fell 27% to $772 mn.

EPS (diluted) was minus 27 cents in Q3 vs a profit of 68 cents a year ago (using GAAP), an overall loss of $208 mn vs $595 mn. Non-GAAP accounts turn the loss into a fictitious $1.022 mn gain or 68 cents/sh.

Teva also upped its guidance to $18.6-19 bn from $18.5-19 bn, much less than the NVO rise. Of course, the non-GAAP figures bedazzled the analysts.

Mr. Schultz used the FDA belated approval for its Ajovy migraine drug to forecast upward sales going forward, but it is not covered by a major drug prescription service, Express Scripts, arguing that it is more likely to be administered in a doctor's office than other migraine drugs and is forecast to become a blockbuster after a fast take-up mostly for quarterly jabs. He also said he is in talks with Express.

He also predicted that 2019 would be “an EBITDA trough year.” (EBITDA is defined in the BCE note above, a measure of cash flow. He also warned of “currency headwinds.” But he raised the 2018 EPS guidance to $2/80-2.95 from the earlier $2.55-2.80. Teva is now boasting of its generics side, a change from a decade of trying to become a full pharmaceutical house with real drugs like the multiple sclerosis drug now off-patent, and Ajovy. He also said Teva will launch a generic epipen for allergies in the current quarter.

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