(Corrects anemia drug name in 13th paragraph.)
July 29 (Bloomberg) -- Amgen Inc., the world’s biggest biotechnology company by sales, reported second-quarter earnings that beat analysts’ estimates and raised its profit estimate for the year.
The company also announced it will cut more than 2,400 jobs through 2015 and close plants in two states.
Net income rose 23 percent to $1.55 billion, or $2.01 a share, from $1.26 billion, or $1.65 a share, a year earlier, the company said in a statement. Earnings excluding one-time items were $2.37 a share, topping by 30 cents the average of 18 analysts’ estimates compiled by Bloomberg. Revenue increased 11 percent to $5.18 billion.
“The earnings-per-share beat was massive,” Mark Schoenebaum, an analyst with ISI Group LLC in New York, said in a note to clients. He called the job cuts “just as important,” and predicted they would add to profits this year and beyond.
The higher-than-expected earnings were driven by sales of Enbrel, the company’s top drug for arthritis, which increased 7 percent to $1.24 billion, beating analysts’ projections of $1.14 billion. Enbrel sales missed estimates in the first quarter, which at the time sent the Thousand Oaks, California-based company’s shares down the most in a year.
Amgen announced today it would cut 2,400 to 2,900 employees, or 12 percent to 15 percent of its total workforce, with the firings beginning this year and continuing through 2015. Most of the job reductions will come in the U.S., Amgen said. The company also said it will close facilities in Washington and Colorado, while expanding its presence in South San Francisco, California, and Cambridge, Massachusetts.
The changes “will allow us to reallocate resources to invest in our upcoming launches and drive growth,” Chief Executive Officer Robert Bradway said in the statement.
“The great companies are constantly figuring out how to do better,” Bill Smead, chief executive officer and chief investment officer of Smead Capital Management, which owns Amgen shares, said in a telephone interview. “They have a great balance between creating shareholder value and keeping an eye to the future.”
Amgen said it would take a pretax charge of $775 million to $950 million for the costs of the restructuring.
The job reductions announced today are in addition to those made earlier this year. In March, Amgen said it would cut 252 sales and corporate positions and announced plans to eliminate an additional 70 information service jobs in June.
The company raised its 2014 forecast for earnings excluding one-time items to $8.20 per share to $8.40 per share, and revenue to $19.5 billion to $19.7 billion. Previously, Amgen predicted $7.90 to $8.20 in earnings per share and $19.2 billion to $19.6 billion in revenue.
Shares gained 4.8 percent to $129 in extended trading at 5:36 p.m. New York time after closing at $123.31. The company has gained 13 percent in the past 12 months.
Amgen is seeking to expand its portfolio of products from Enbrel and anemia drugs Epogen and Aranesp. The company acquired blood cancer treatment Kyprolis in its $10.4 billion purchase of Onyx Pharmaceuticals Inc. last year, and also has an experimental cholesterol drug that the company will submit this year for regulatory approval in the U.S. and E.U.
Amgen is also exploring treatments of kidney disease, and reported on July 17 that its experimental drug AMG 416 reduced parathyroid hormone levels in patients with chronic disease.