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Novartis Q4'16 profit declines; sales hit by Gleevec competition

Novartis AG said fourth-quarter 2016 net earnings declined 11% to $936 million, or 40 cents per share, compared to $1.05 billion, or 44 cents per share, in the year-ago period.

Core net income, which excludes some items, fell 2% in the fourth quarter to $2.66 billion, or $1.12 per share.

The S&P Capital IQ consensus normalized EPS estimate for the fourth quarter 2016 was $1.13.

Net sales totaled $12.32 billion during the quarter, a 2% decline from the prior-year quarter. Sales were impacted by chemotherapy blockbuster Gleevec's loss of exclusivity.

For the 2016 full year, the company reported net earnings of $6.70 billion, down 5% compared to the previous year, while EPS declined 3% to $2.82. Core net income declined 6% on the full year to $11.31 billion, or a 5% decline to $4.75 on a per-share basis.

Novartis said it expected 2017 net sales to be broadly in line with the prior year, on a constant-currency basis, after absorbing the impact of generic competition. Core operating income is expected to range between a figure broadly in line with the prior year and a low-single-digit decline on a constant-currency basis.

Core operating income in 2016 totaled $12.99 billion, compared to $13.79 billion in the year-ago period.

The Swiss pharmaceutical company is offering a 2% increase on its dividend to CHF2.75 per share for 2016.

It also plans to initiate a share buyback of up to $5.0 billion in 2017.