Hikma outlook cut for unit's margins clouds confidence in overall forecasts (updated)
07/08/2025 11:25
Margin outlook for injectables unit lowered Overall 2025 forecasts maintained, including tariff impact First-half profit dips, but not as bad as analyst expectations Updates shares; adds details on tariffs from CEO interview, analyst comment, outlook, context throughout By Unnamalai L Aug 7 (Reuters) - Hikma HIK.L shares fell on Thursday as the drugmaker cut the margin forecast for its largest unit due to a strong euro and rising costs, overshadowing a profit beat and reaffirmed annual outlook. The generic drugmaker now expects full-year core operating margin between 32% to 33% for its injectables business, which accounted for 42% of core revenue in 2024. Hikma previously expected margins in the mid-30s percentage. Shares fell as much as 10% to 1,695 pence, making it the biggest loser on Britain's blue-chip index .FTSE, which was down 0.26% by 0931 GMT. U.S. President Donald Trump's tariff policies have led to swings in global markets and hurt the dollar, while a national security review of the pharma industry and possible sector-specific tariffs are also forcing companies to adapt rapidly. Hikma still expects 2025 core operating profit of $730 million to $770 million and revenue growth of 4% to 6%, including the impact of current tariffs. "If tariffs become a big deal and start affecting imports to the U.S. ... I think we'll be sitting in a better position than a lot of our peers," CEO Riad Mishlawi told Reuters. About 70% of Hikma's U.S. sales come from products made in the country, which makes up more than half of its total revenues. "The most important takeaway is that Hikma is well placed vis a vis tariffs and is making good progress in R&D," Panmure Liberum analysts said. Mishlawi said Hikma has spoken to the Trump administration as part of the generic drugs industry lobby, Association for Accessible Medicines, about U.S. policies and Hikma's own $1 billion U.S. investment. He added that Hikma had not yet seen a demand shift due to announced tariffs on imports from major generic drugs hub, India , or the broader industry. Hikma's first-half core operating profit fell 7% to $373 million, but surpassed analysts' average expectation of $368 million, as per a company-compiled consensus. (Reporting by Unnamalai L and Pushkala Aripaka in Bengaluru; Editing by Mrigank Dhaniwala) ((Unnamalai.L@thomsonreuters.com;))