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Income fund staple AstraZeneca warns on 2012 earnings

Income investor favourite AstraZeneca has given an earnings warning for 2012, planned a further 7,300 job cuts and announced another £2.9 billion of stock buy-backs.

The pharmaceutical giant is the second largest holding in Neil Woodford’s £11.2 billion Invesco Perpetual High Income fund and his £8.9 billion Invesco Perpetual Income fund, where it makes up 8.11 per cent and 8.23 per cent of the respective portfolios*.

The stock is also owned by Adrian Frost’s £3.9 billion Artemis Income fund*, Chris Fontenla’s £2.8 billion Halifax UK Equity Income fund** and Anthony Nutt’s £2 billion Jupiter Income fund*.

AstraZeneca’s latest financial results say revenue fell by 2 per cent at constant exchange rates across 2011 to hit £21.2 billion. Sales in emerging markets, however, rose by 10 per cent.

The company’s core operating profit dropped 4 per cent to £8.3 billion. It expects 2012 revenue to be “adversely affected by government interventions on pricing and ongoing generic competition”.

AstraZeneca’s market exclusivity for Seroquel IR and Atacand in global markets, as well as for Crestor in Canada, will expire in 2012.

The firm also unveiled details of its restructuring programme, which will see another 7,300 jobs axed by 2014. This comes on top of the 12,600 positions cut between 2007 and 2009 and the 9,000 jobs removed by the end of 2011.

In addition, the company, which increased its full-year 2011 dividend by 10 per cent to $2.80 a share, will buy back a further $4.5 billion in shares this year. In 2011, the firm carried out $5.6 billion in net share repurchases.

AstraZeneca chief executive David Brennan says: “While the further expected losses of market exclusivity make for a challenging 2012 outlook, we remain committed to a long-term, focused, R&D-based strategy, and today we have announced further steps to drive productivity in all areas to improve returns on our investment in innovation.”

The company’s shares were down 3.46 per cent to 2,982.5p as of 0942 GMT.

* as of December 31

** as of November 30

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