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news.Bristol-Myers Squibb has reported reduced Q2 and H1 2006 earnings, blaming increased R&D investment in addition to a lower tax rate during the same period last year.
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Bristol-Myers Squibb posted Q2 2006 net sales from continuing operations of $4.9 billion and net earnings from continuing operations of $667 million, or $0.34 per diluted share, compared to $991 million, or $0.50 per diluted share for the same period in 2005.
On a non-GAAP basis excluding specified items, Q2 2006 net earnings from continuing operations were $680 million, or $0.35 per diluted share, compared to $933 million, or $0.47 per diluted share for the same period in 2005.
BMS said the decrease in net earnings in 2006 as compared to 2005 is mainly due to the significantly lower tax rate in 2005 resulting from the benefits realized from the resolution of a tax audit and a one-time American Jobs Creation Act related tax adjustment, and continued increased investment in 2006 for pharmaceutical R&D.
Indeed, R&D expenses increased by 14% to $740 million in the second quarter of 2006 from $649 million in the same period in 2005, principally reflecting continued investments in late-stage compounds.
For the six months ended June 30, 2006, net sales from continuing operations increased 1%, despite a 1% unfavorable foreign exchange impact, to $9.5 billion compared to the first six months of 2005. Under GAAP, net earnings from continuing operations in the first six months of 2006 were $1.4 billion, or $0.70 per diluted share, compared to $1.5 billion, or $0.78 per diluted share for the same period last year.
On a non-GAAP basis, excluding specified items, BMS reported net earnings from continuing operations of $1.3 billion, or $0.67 per diluted share for the six months ended June 30, 2006, compared to $1.6 billion, or $0.81 per diluted share for the same period last year.
Despite the decline in earnings, the company has reaffirmed its 2006 full-year earnings guidance of fully-diluted earnings per share from continuing operations to be between $1.15 and $1.25 on an adjusted non-GAAP basis.
BMS also said that anticipated sales declines due to continued exclusivity losses during 2006 are expected to be more or less offset by growth in sales of the company’s growth drivers and new products.