Wednesday, February 17, 1999 Published at 09:01 GMT
Business: The Company File
Zeneca earnings dip
Research investment costs hit Zeneca's bottom line
UK drugs giant Zeneca, which plans to merge with Swedish rival Astra, has announced a 2% fall in 1998 pre-tax profits to £1.06bn ($1.7bn) compared to £1.08bn in the previous year.
The strong pound wiped £131m off the group's profits. Earnings at the group's specialty products business, which produces inks, Quorn and resins and has been put up for sale, also fell 4%.
However, chief Executive David Barnes said: "Good underlying business growth has been sustained across all three major businesses, providing an excellent platform for the planned merger with Astra."
The group's sales rose 5% to £5.5bn and its research and development budget grew to £708m from £653m.
The results came in at the top end of City analysts' expectations.
Agrochemicals turnover rose 16% despite the economic downturn in its South East Asian markets.
Mr Barnes said Zeneca was close to securing the sale of its specialty products business.
Astra deal Zeneca has agreed to merge with Astra AB of Sweden in a £43bn deal. However, competition regulators in Europe and the US are delaying its completion.
The group also released 1998 results for the combined AstraZeneca, showing pre-tax profits up 1% to $3.458 bn on sales up 9% at $17.234bn.
On Tuesday, Astra reported a 15% rise in profits before exceptional items to 16.4bn Swedish kroner ($2.06bn).
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