Revenue in the second quarter increased by 1 percent at CER, but was up 3 percent on an actual basis as a result of the positive impact of exchange rate movements. US revenue declined by 4 percent, reflecting the impact of generic competition for Toprol-XL, Pulmicort Respules and Casodex. Group revenue in the Rest of World was up 5 percent, largely the result of a 16 percent increase in Emerging Markets; Emerging Markets accounted for approximately 75 percent of the revenue growth outside the US. Revenue in Western Europe was up 1 percent. Revenue in Established Rest of World was up 4 percent, which was impacted by the biennial price cuts in Japan.
Core operating profit in the second quarter was $3,650 million, unchanged in constant currency terms. The beneficial effect of revenue growth and operating leverage in the quarter was offset by lower other operating income compared with the second quarter last year, which included the proceeds from the Nordic OTC product portfolio disposal. Reported operating profit increased by 5 percent, ahead of the growth in Core operating profit. Adjustments to Core operating profit were $139 million higher in the second quarter last year, as higher restructuring costs in the second quarter this year were more than offset by legal provisions in the prior year.
Core earnings per share in the second quarter were $1.79 compared with $1.64 in the second quarter 2009, a 9 percent increase at CER. Core earnings per share benefited from lower net finance expense and a lower effective tax rate compared with last year. Reported earnings per share in the second quarter were $1.46, up 22 percent compared with the second quarter 2009, reflecting the net impact of restructuring costs and legal provisions that benefited the reported operating profit growth rate.
First Half
Revenue in the first half increased by 4 percent at CER, but was up 7 percent on an actual basis as a result of the positive impact of exchange rate movements. Revenue in the US was down 1 percent, reflecting the generic competition that impacted the second quarter performance. Revenue in the Rest of World was up 8 percent. Revenue in Emerging Markets was up 18 percent in the first half, accounting for more than half of the revenue growth outside the US. Revenue in Western Europe increased by 4 percent. Revenue in Established Rest of World markets increased by 8 percent.
Core operating profit for the first half increased by 5 percent to $7,507 million, leveraging higher revenues against lower SG&A and R&D expenditures, which was partially offset by a lower gross margin as a percentage of sales and lower other income compared with last year. Reported operating profit was $6,677 million, an increase of 8 percent. As was cited in the second quarter performance noted above, the step-up compared to Core operating profit growth in the first half is the result of higher adjustments to Core operating profit last year, chiefly the legal provision.
Core earnings per share for the first half were $3.82, an increase of 16 percent, which reflects the benefit from the net adjustments to tax provisions ($0.13) in the first quarter of 2010, in addition to the lower net finance expense and the lower effective tax rate that featured in the second quarter performance. Reported earnings per share were up 23 percent to $3.37.
David Brennan, Chief Executive Officer, said: "Our second quarter performance reflects continued strong growth in our Emerging Markets and good performance for key brands Crestor, Seroquel and Symbicort. While revenue and Core EPS comparisons become more challenging in the second half of the year, we have increased our full year financial targets."
About AstraZeneca
AstraZeneca is a global, innovation-driven biopharmaceutical business with a primary focus on the discovery, development and commercialisation of prescription medicines. As a leader in gastrointestinal, cardiovascular, neuroscience, respiratory and inflammation, oncology and infectious disease medicines, AstraZeneca generated global revenues of US $32.8 billion in 2009. For more information please visit: www.astrazeneca.com.