Struggling Alcon shows some progress as Novartis weighs spinoff

Alcon makes surgical equipment for eye-care treatment including products for laser surgery.
Alcon makes surgical equipment for eye-care treatment including products for laser surgery.

The top executive at Novartis pointed to early signs of a revival at its Fort Worth-based Alcon eye-care division, which will strengthen his hand as he considers an exit from the ailing business.

Alcon’s revenue in 2017 will likely grow by a low “single-digit” percent, the Swiss company said in a statement on Tuesday. That’s a change from April, when the company had said the unit’s sales may be unchanged from the prior year or expand slightly. During the second quarter, sales for the business expanded 1 percent.

The turnaround at Alcon will “improve the options we have available to us,” Chief Executive Officer Joe Jimenez said in a Bloomberg Television interview. In January, Novartis said that it was reviewing all options including a spinoff or initial public offering for the division, and would provide an update by the end of the year.

“If we were to do a capital markets exit, we’d want to see a number of quarters of consecutive growth,” Jimenez said in the interview. “Hopefully we can continue this momentum and drive additional growth in the back half of 2017 and into 2018.”

Alcon, which makes surgical equipment and contact lenses, employs about 4,000 workers at its campus near I-35 and I-20 in south Fort Worth. The company’s pharmaceutical business was integrated into another Novartis division last year when Mike Ball was brought in to replace Jeff George as CEO.

“After a long period of retrenchment and heavy investment, Alcon has finally delivered a quarter with clear sales growth in its two main subdivisions,” Alistair Campbell, an analyst at Berenberg Bank, said in a note to clients.

Jimenez told investors in October 2015 that Novartis was doing a “deep analysis” of Alcon and that he hoped to come up with a plan to get the unit “back to a decent growth rate.” The company has acknowledged that the turnaround, which Jimenez had hoped to see in 2016, has taken longer.

Novartis on Tuesday posted a smaller decline in second-quarter earnings than analysts had projected as newer medicines helped offset the eroding sales of its biggest drug. Profit dropped to $1.22 a share, beating analysts’ estimates of $1.18.

Revenue in the latest quarter slumped 2 percent to $12.2 billion, matching analysts’ projections. The drugmaker’s Sandoz generics unit posted a 5 percent decline in sales as U.S. prices continued to plummet.

This article includes material from Star-Telegram archives.