Alcon reported total sales of $1.8 billion for the third quarter, up by 4 percent on a reported basis and by 6 percent on a constant-currency basis.
The operating margin improved to a still negative rate of 1.0 percent from 16.0 percent and the core operating margin widened to 17.4 percent from 17.0 percent a year earlier. Diluted losses per share narrowed to $0.14 from $0.42 a year earlier and core diluted earnings per share dropped to $0.46 from $0.50.
Alcon's vision care business saw its sales rise by 3 percent to $822 million, with constant-currency revenues up 4 percent. Contact lens sales reached $518 million, up by 5 percent in dollars and by 7 percent in local currencies. Ocular health revenues fell by 1 percent to $304 million, but were flat at constant currency rates.
Sales of Dailies Total 1 contact lenses and Systane Complete eye drops continued to achieve double-digit gains during the quarter. The U.S. launch of Precision1 contact lenses is underway and early reception has been favorable, according to the company.
For the full financial year, the group expects sales growth of 4-5 percent on a constant currency basis and a core operating margin of 17.0 to 17.5 percent.
Alcon plans to incur $300 million in costs to finance efficiency measures and reorganize its business, which are expected to lead to $200-225 million in savings on an annualized run rate by 2023.
Many of the savings will come from a new standardized process that has been applied to 85 percent of the sales as well as the elimination of complex layers of management that Alcon was using when it was part of Novartis. The savings will be reinvested primarily in research and development and new product marketing to support sales growth.
Novartis spun off Alcon last April. The company has raised the expected costs of its separation costs from Novartis to some $500 million from the original $300 million projection, reflecting updated estimates for the replication of IT systems and the transition of certain manufacturing capabilities.
Alcon reiterated its long-term goals of an average annual mid-single-digit growth in sales, a core operating margin in the low to mid-teens and free cash flow 2.5 to 3 times higher than last year's level of $260 million. The management wants the company to become more focused and more agile.