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Pandora 2018Q4

Today Pandora released their annual earnings. The self explanatory figures below summarise the earnings, the margins, the ROIC and the growth for the recent comparable quarters and for the previous TTM periods by product segment and by geographic segment.

Revenue and earnings


Margins


ROIC

By product segment


By geographic segment





Programme NOW

In November Programme NOW was launched to accelerate the strategic transformation of Pandora and drive sustainable growth.

As part of Programme NOW cost reductions of DKK1.2B are planned.

In this context I took notice of the following about “over push” in the press release and the steps taken to remedy it:

“Over push: increased promotional activity has diluted the brand equity and led consumers to wait for the next promotion instead of buying at full price. Additionally, the increase of new product introductions coupled with an immature merchandising process has led to a cluttered assortment presentation in the stores and a further build-up of inventory”

2019 Outlook


Pandora guides with organic growth between 0% and -2% in 2019 excluding their commercial reset as part of Programme NOW.

And they guide with an EBIT margin between 26% and 28% in 2019 excluding restructuring costs.

Pandora expects to return DKK4B to shareholders in 2019. The suggestion is for the dividend per share to be maintained and the repurchase of shares to be cut roughly in half to DKK2.2B. Less money has to be spent on the dividend in 2019, because of the share buyback in 2018.

Press coverage

Here headlines from other news outlets:
Reuters: Jeweler Pandora plans cost cuts, sales seen falling
Bloomberg: Pandora CFO on Guidance, Buyback, CEO Search, Store Closures
Boersen: Pandoras aktie brager op med 15 pct efter regnskab og spareplan

Summary

In summary it was anything but an impressive quarter, but it was expected and a data driven diagnosis has been carried out as part of Programme NOW and the multiples are quite low, so that might explain, why Q4 was well received. Pandora was up by more than 10% in early trading hours. Below price-to-operating income time series for publicly listed companies operating in the jewellery industry.

Appendix


Pandora is one of the largest luxury brands in the world and could overtake Tiffany & Co. in terms of revenue before the end of the next decade.


Pandora has better margins than most other luxury brands.

Pandora is still the most well recognised jewellery brand in the world.

The double digit growth in online sales continue:

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Novo Nordisk 2018Q4

Novo Nordisk has released their annual report. Positive growth was driven primarily by Ozempic® in the US, Saxenda®, Tresiba® and Victoza®, whereas negative growth was driven by primarily Levemir® in the US. The mentioned drugs and the trailing twelve month (TTM) sales of diabetes and obesity drugs are summarised below.

Name Drug Type Injection Therapy Successor
Ozempic® Semaglutide GLP-1 Weekly Diabetes
Victoza® Liraglutide GLP-1 Daily Diabetes Ozempic®
Saxenda® Liraglutide GLP-1 Daily Obesity semaglutide?
Tresiba® InsDegludec Insulin Once daily Diabetes LAI287?
Levemir® InsDetemir Insulin Once or twice daily Diabetes Tresiba®
Xultophy® InsDegludec + Liraglutide Insulin + GLP-1 Once daily Diabetes LAIsema?
NovoRapid® InsAspart Insulin Diabetes
NovoMix® InsAspart Insulin Diabetes
Ryzodeg® InsAspart + InsDegludec Insulin Diabetes
Fiasp® InsAspart Insulin Diabetes


Business segments

The revenue and profit generated by the two business segments and is summarised below:

R&D

In terms of R&D highlights they were LAI287 and the completion of the PIONEER6 phase 3 study on oral semaglutide. The slide below summarises other highlights:

On November 23rd Novo Nordisk sent out a press release on the PIONEER6 results, which concluded the PIONEER studies on oral semaglutide:
Oral semaglutide demonstrates favourable cardiovascular safety profile and significant reduction in cardiovascular death and all-cause mortality in people with type 2 diabetes in the PIONEER 6 trial
The result of the PIONEER studies in terms of HbA1c reduction and weight loss is summarised in the figure below:

Click for links to all of the press releases on the PIONEER trials:

PIONEER 1:
Efficacy and Safety of Oral Semaglutide Versus Placebo in Subjects With Type 2 Diabetes Mellitus Treated With Diet and Exercise Only (PIONEER 1)
https://clinicaltrials.gov/ct2/show/NCT02906930
Novo Nordisk successfully completes the first phase 3a trial, PIONEER 1, with oral semaglutide
https://www.novonordisk.com/content/Denmark/HQ/www-novonordisk-com/en_gb/home/media/news-details.2170941.html

PIONEER 2 (vs SGLT2 / Jardiance® from Lilly):
Efficacy and Safety of Oral Semaglutide Versus Empagliflozin in Subjects With Type 2 Diabetes Mellitus (PIONEER 2)
https://clinicaltrials.gov/ct2/show/NCT02863328
Oral semaglutide shows superior improvement in HbA1c vs empagliflozin in the PIONEER 2 trial
https://www.novonordisk.com/content/Denmark/HQ/www-novonordisk-com/en_gb/home/media/news-details.2195846.html

PIONEER 3 (vs DPP4 / Januvia® from Merck):
Efficacy and Long-term Safety of Oral Semaglutide Versus Sitagliptin in Subjects With Type 2 Diabetes (PIONEER 3)
https://clinicaltrials.gov/ct2/show/NCT02607865
Oral semaglutide shows superior reductions in HbA1c and weight compared to sitagliptin in the long-term safety and efficacy trial, PIONEER 3
https://www.novonordisk.com/content/Denmark/HQ/www-novonordisk-com/en_gb/home/media/news-details.2211063.html

PIONEER 4:
Efficacy and Safety of Oral Semaglutide Versus Liraglutide and Versus Placebo in Subjects With Type 2 Diabetes Mellitus (PIONEER 4)
https://clinicaltrials.gov/ct2/show/NCT02863419
Oral semaglutide shows statistically significantly greater reductions in HbA1c and weight compared to Victoza® and sitagliptin in the PIONEER 4 and 7 trials
https://www.novonordisk.com/content/Denmark/HQ/www-novonordisk-com/en_gb/home/media/news-details.2200408.html

PIONEER 5:
Efficacy and Safety of Oral Semaglutide Versus Placebo in Subjects With Type 2 Diabetes and Moderate Renal Impairment (PIONEER 5)
https://clinicaltrials.gov/ct2/show/NCT02827708
Oral semaglutide provides superior HbA1c and weight reductions versus placebo in people with type 2 diabetes and renal impairment in the PIONEER 5 trial
https://www.novonordisk.com/content/Denmark/HQ/www-novonordisk-com/en_gb/home/media/news-details.2211959.html

PIONEER 6:
A Trial Investigating the Cardiovascular Safety of Oral Semaglutide in Subjects With Type 2 Diabetes (PIONEER 6)
https://clinicaltrials.gov/ct2/show/NCT02692716
Oral semaglutide demonstrates favourable cardiovascular safety profile and significant reduction in cardiovascular death and all-cause mortality in people with type 2 diabetes in the PIONEER 6 trial
https://www.novonordisk.com/media/news-details.2226789.html

PIONEER 7:
Efficacy and Safety of Oral Semaglutide Using a Flexible Dose Adjustment Based on Clinical Evaluation Versus Sitagliptin in Subjects With Type 2 Diabetes Mellitus. (PIONEER 7)
https://clinicaltrials.gov/ct2/show/NCT02692716
Oral semaglutide shows statistically significantly greater reductions in HbA1c and weight compared to Victoza® and sitagliptin in the PIONEER 4 and 7 trials
https://www.novonordisk.com/content/Denmark/HQ/www-novonordisk-com/en_gb/home/media/news-details.2200408.html

PIONEER 8:
Efficacy and Safety of Oral Semaglutide Versus Placebo in Subjects With Type 2 Diabetes Mellitus Treated With Insulin (PIONEER 8)
https://clinicaltrials.gov/ct2/show/NCT03021187
Oral semaglutide demonstrates statistically significant reductions in HbA1c and body weight in people with long duration of type 2 diabetes treated with insulin
https://www.novonordisk.com/content/Denmark/HQ/www-novonordisk-com/en_gb/home/media/news-details.2222176.html

PIONEER 9:
Dose-response, Safety and Efficacy of Oral Semaglutide Versus Placebo and Versus Liraglutide, All as Monotherapy in Japanese Subjects With Type 2 Diabetes (PIONEER 9)
https://clinicaltrials.gov/ct2/show/NCT03018028
Oral semaglutide demonstrates greater reductions in both HbA1c and body weight compared to Victoza® in Japanese people with type 2 diabetes
https://www.novonordisk.com/media/news-details.2226662.html

PIONEER 10:
Safety and Efficacy of Oral Semaglutide Versus Dulaglutide Both in Combination With One OAD (Oral Antidiabetic Drug) in Japanese Subjects With Type 2 Diabetes (PIONEER 10)
https://clinicaltrials.gov/ct2/show/NCT03015220
Oral semaglutide demonstrates greater reductions in HbA1c and body weight and comparable number of adverse events vs dulaglutide in Japanese people with type 2 diabetes
https://www.novonordisk.com/content/Denmark/HQ/www-novonordisk-com/en_gb/home/media/news-details.2216978.html

Novo Nordisk har acquired a priority review voucher for oral semaglutide for DKK800m, which will speed up the launch.

The long acting insulin 287 (LAI287) with a weekly injection has been promoted to phase 2 in the pipeline and LAIsema (LAI287 + semaglutide) is in phase 1. A few of the upcoming clinical trials on LAI287 include NCT03789578 (LAI287 with and without semaglutide in T2D cases) and NCT03751657 (comparison of weekly LAI287 with daily Insulin Glargine).

Press coverage

The earnings release triggered the following headlines and interviews.
Bloomberg: Novo Nordisk CEO Applauds Trump Plan to Limit Rebates
Reuters: Novo Nordisk’s new diabetes drug, outlook lift shares

Financials

The figures below summarise some of the key financial metrics over the past 10 quarters and 10 years.

Future

The main event in 2019 for Novo Nordisk will probably be the launch of oral semaglutide. Here the expectation regarding approval from CSO Mads Krogsgaard Thomsen:

Novo Nordisk has notified the FDA that we will ask for a priority review for oral semaglutide based on the priority review voucher acquired in 2018. The use of the priority review voucher shortens the expected FDA review period to six months. We now expect to file the NDA for oral semaglutide with the FDA by the end of this quarter and in the EU and Japan in the second and third quarters of this year, respectively.

One would expect Ozempic® and Saxenda® to continue to contribute positively to the growth in 2019. The annual report from Eli Lilly will be released two weeks from now.