Accelerating Growth and Returns at Amgen

Amgen Inc. founded in 1980 and headquartered in California, USA is a global biotechnology pioneer that discovers, develops, manufactures and delivers human therapeutics. The company mainly focuses in the areas of cancer, kidney disease, rheumatoid arthritis and other serious illnesses.

Amgen continues its ascent with improved financial performance

The Company has been reporting positive revenue growth from the last five years driven by a high quality product pipeline and strong execution across the portfolio. Amgen’s revenue for fiscal year 2013 increased by 8% from the prior year to $18,676 million and by more than 27% from the fiscal year 2009.

The company’s high operating expenses in 2011 due to legal settlement charges dragged the company’s performance down as operating income, net income and EPS all declined. However they have rebounded since then. Company’s operating income increased at a slower pace of 5.1% in 2013 compared to a 29% increase in operating income witnessed in 2012. This high increase in operating income was achieved through well planned cost saving measures initiated in the fiscal year 2012. The operating margin of 39% in Fiscal year 2013 was the highest operating margin that Amgen recorded in the last five years. Net Income for the fiscal year 2013 increased by 736 million to $5,081 million, helped by higher operating income. This increase in Net Income helped fuel the meteoric rise in EPS as it grew by 20% to $6.75 for the year 2013, which followed an even spectacular growth of 38% in 2012.

Amgen continued its performance streak in 2014 as revenues for the second quarter ended June 30, 2014 increased by 11% from the same period in the prior year and by 15% sequentially. Net income for second quarter ended June 2014 increased substantially by 23% from the same period in the prior year helped by higher revenues and operating income.

Shareholders rewarded with dividend increase

Amgen started paying dividends in August 2011 and for the fiscal year 2013 the management increased its dividend by an impressive 30%. With share repurchases of $0.8 billion and $1.4 billion in dividends Amgen has handsomely rewarded its shareholders in fiscal year 2013.

Strong Liquidity position

Amgen’s long term debt of $30.8 billion as of June 2014 represents a reduction of $1 billion or 4% from the year end. Amgen boasts of an effective working capital management as reflected in its current ratio of 3.44 for the fiscal year 2013 indicating ample liquidity to meet any unforeseen financial needs. Share buybacks in the recent years have ensured higher return on equity as ROE increased by 3.6% points to 23% in fiscal year 2013 from the year 2011.

Attractive Earnings and Dividend Growth

Amgen is on path to profitability supported by its strong product pipeline which is realized through increased revenues, operating profit margins and net income. The cost saving initiatives which will bring in operational efficiency will enable Amgen to focus on growth areas while continuing to deliver significant value to shareholders.

Upward movement of Amgen’s stock graph helped by better financial results


Amgen Annual Report 2013