A Look at NVO’s Spending and Earnings in Fiscal 2019

EPS trends

In the first-quarter earnings investor presentation, Novo Nordisk (NVO) guided for YoY operating profit growth of 2% to 5% at a CER (constant exchange rate) in fiscal 2019. The company expects its reported operating profit to benefit by five percentage points due to favorable foreign exchange fluctuations in fiscal 2019. The company reported an operating profit of 14.24 billion Danish kroner in the first quarter, a YoY rise of 14% on a reported basis and 8% on a CER basis. According to the first-quarter earnings call, the operating profit benefitted from the reversal of write-downs of the pre-launch inventory of oral semaglutide. Novo Nordisk reported dilutive EPS of 4.36 Danish kroner, a YoY decline of 0.91%.

Analysts expect Novo Nordisk’s non-GAAP EPS to change YoY by -2.87% to $2.45 in fiscal 2019, and 14.60% to $2.81 in fiscal 2020. Analysts also expect the company’s non-GAAP EPS to change YoY by -13.36% to $0.59 in the second quarter, 8.06% to $0.63 in the third quarter, and 11.32% to $0.59 in the fourth quarter of fiscal 2019. While these forecasts are in dollar terms, Novo Nordisk’s presentation currency is Danish kroner.

Financial items guidance

In the first-quarter earnings call, Novo Nordisk has guided for a net financial items loss of around 3.3 billion Danish kroner, associated with foreign exchange hedging contracts and losses on unhedged currencies.

Tax rate and capital expenditures guidance

In the first-quarter earnings investor presentation, Novo Nordisk has guided for an effective tax rate of 20% to 22%, capital expenditures of around 9.0 billion Danish kroner, and free cash flow of around 29 billion–34 billion Danish kroner in fiscal 2019. The company has also guided for depreciation, amortization, and impairment losses close to 4.5 billion Danish kroner for fiscal 2019.