Continuing from its success at the start of the year, Dutch drugs and chemicals group Akzo Nobel has turned in a solid set of results for the second quarter, with operating income excluding special items rising 9% to 365 million euros ($460m).
Net income almost doubled from 182 million euros to 361 million euros, largely as a result of improved operational earnings and a tax benefit. Excluding extraordinary items, net income leapt 23% to 245 million euros in the period.
Sales of 3.6 billion euros, up 7% over the year-earlier quarter, were driven, in part, by a strong performance by its pharmaceuticals unit, Organon. The division pulled in sales of 675 million euros for the quarter, with growth of 12% cushioning a heavy investment in R&D and contributing to a 49% leap in the division’s operating income of 104 million euros (excluding incidentals).
Sales were propelled by the group’s infertility franchise; Puregon (follitropin beta) - Organon’s number one product – achieved a record result, jumping 10% to 102 million euros, while NuvaRing also enjoyed solid growth, its sales rocketing 75% to 53 million euros, reflecting a growing interest in the contraceptive ring.
Commenting on the company’s performance, Chief Financial Officer Rob Frohn said: “Our businesses performed well in the second quarter, with both top and bottom line improving significantly, particularly at Organon and Coatings.” He warned that: “Energy prices and raw materials remain a concern,” but remained upbeat in his overall outlook for the remainder of the year.
Akzo is currently undergoing a significant transformation, splitting its business segments into two independent companies - one focusing on pharmaceuticals and the other on coatings and chemicals.
Pharma will be spun out of the group, initially via an initial public offering (IPO) that will create a new company called Organon Biosciences. A complete separation of the pharma business should take place two to three years after the IPO, which is scheduled for the second half of this year.
The move comes after a concerted effort by Akzo's management, started in 2004, to 'fix pharma' and turn around a business that, at the time, was facing patent expirations on key product lines, safety issues with some products and an increasingly competitive operating environment for its contract manufacturing business.