Eli Lilly, Mattel, Bank of America, Novartis and Merck feature in today's report.

Eli Lilly misses earnings estimates

Eli Lilly, the world's biggest maker of psychiatric drugs, missed analysts' earnings estimates after suffering higher costs than it had predicted for stopping work on inhaled insulin.

Lilly reported a charge of $145.7 million, or nine US cents a share, for halting development of its AIR insulin inhaler.

This was at least $25.7 million more than the Indianapolis-based company estimated when it abandoned the drug last month.

First-quarter profit more than doubled from a year earlier, when the company acquired the maker of the impotence drug Cialis.

Revenue rose 14 per cent to $4.81 billion, fuelled by sales of the antidepressant Cymbalta, the impotence drug Cialis and gains from exchanging foreign currencies into dollars, the company said.

But this was partly offset by lower than expected sales of the company's diabetes drug Byetta. - (Bloomberg/Reuters)

Cost-cuts boost first-quarter profits at Novartis to $2.31bn

First-quarter net profits at Novartis, the Swiss drugmaker, rose 10 per cent to $2.31 billion, (€1.45 billion) helped by cost cuts and the weak dollar, easily beating forecasts.

Novartis, which is digesting a $39 billion deal to buy eyecare company Alcon, also confirmed its full-year forecast.

"Compared to competitors' results we consider Novartis figures to be quite okay," DZ Bank analyst Thomas Maul said. "The second half of 2008 should offer some more upside."

Europe's second-largest drugmaker by market value faces the same problems as many of its peers, with earnings growth expected to slow due to the loss of exclusivity on some of its drugs, pricing pressures and more complicated paths to market. But it benefited from dollar weakness and a cost-cutting programme at its drugs unit in the first quarter, as well as a one-off gain of $115 million from the divestment of some mature products, and group sales beat forecasts with a 9 per cent rise to $9.91 billion.

Drug revenue was up 6 per cent at $6.26 billion, despite generic competition to Lotrel and Trileptal. - (Reuters)

Mattel posts net loss of $46.6m

Mattel, the world's largest toymaker, posted its first quarterly loss in almost three years on higher manufacturing costs in China, while rival Hasbro's profit unexpectedly rose on sales of Transformers action figures.

Mattel posted a net loss of $46.6 million, or 13 cents a share, in the first quarter, compared with net income of $12 million, or three US cents a share, a year earlier. Sales declined 2.2 per cent to $919.3 million, the maker of Hot Wheels and Matchbox cars said.

Without currency gains, revenue would have dropped at least 7 per cent. "The biggest thing they continue to struggle with is Barbie in the US," said Tim Conder, an analyst with Wachovia Securities in St Louis.

Mattel, which recalled more than 21 million Chinese-made products in 2007, expects Chinese manufacturing costs to rise further. The recalls cost Mattel $110 million in 2007 for toy returns and legal, advertising and testing expenses.

Hasbro's net income jumped 14 per cent to $37.5 million, or 25 cents a share, from $32.9 million, or 19 cents, a year earlier. - (Bloomberg)

Bank of America hit by writedowns

Bank of America, hit by writedowns and rising credit costs, yesterday said earnings dropped nearly 80 per cent in the first quarter to $1.2 billion (€0.75 billion).

The largest US bank by market value said provision for credit losses soared by $4.78 billion to $6.01 billion, driven by problems in home equity and small business loans as well as loans to homebuilders.

Overall, the bank said it earned $1.21 billion, or 23 cents a share, down from $5.26 billion, or $1.16, last year. The figures fell short of analysts' estimates of a profit of 41 cents a share. Net revenue dropped 6 per cent to $17 billion.

"Despite revenue growth in most of our businesses, these results clearly did not meet our expectations," Ken Lewis, chief executive, said in a statement.

"The weakness in the economy and prolonged disruptions in the capital markets took their toll on our performance." - (Financial Times service)

Merck offsets plunging sales

Pharmaceutical group Merck yesterday reported better-than-expected quarterly earnings, as tight cost controls offset plunging sales of an osteoporosis drug now facing generic competition and slowing sales growth of its Vytorin and Zetia cholesterol fighters.

"Merck's revenue came up a little below expectations, but their cost control was good," said Edward Jones analyst Linda Bannister.

An unexpectedly low tax rate in the quarter also boosted results, and helped it reaffirm its 2008 earnings forecast of modest growth, Bear Stearns analyst John Boris said.

The company said it earned $3.3 billion (€2.07 billion), or $1.52 per share, compared with $1.7 billion, or 78 cents per share, in the year-earlier period. Excluding special items, Merck earned 89 cents per share. Analysts on average expected 86 cents per share. - (Reuters)