Novo Nordisk CEO Says Danish Central Bank Should Keep Euro Peg
(Bloomberg) — A decision by the Danish central bank to drop the country’s currency peg would hurt Novo Nordisk A/S and force the world’s largest insulin maker to rethink strategy, Chief Executive Officer Lars Rebien Soerensen said.
Denmark is under pressure to cut the link with the euro after the Swiss National Bank’s surprise decision on Jan. 15 to abandon the cap on the franc-euro exchange rate, which roiled markets. The Nordic country cut its deposit rate three times in 10 days, seeking to deter speculation it may abandon the peg.
Doing so would put Danish companies in a similar situation to Swiss ones, the Novo Nordisk CEO said. Novartis AG, the world’s biggest drugmaker, said earlier this week it will need to cut costs in its home country as the franc’s gains threaten to erode profit in 2015. Costs denominated in francs are 15 percent higher now in euro terms than at the start of the year.
“Any move like we’ve seen in Switzerland would not be very advantageous to Novo Nordisk and we would have to adjust our outlook,” Rebien Soerensen said in an interview with Bloomberg Television today. A dropped peg “would force us to look at our productivity, cost picture and the like. It would be a replay of the Swiss situation.”
Geneva-based SGS SA, the world’s largest product-inspection company, has said it may move some operations abroad.
Still, current exchange rates against the krone are so favorable that Novo Nordisk expects them to help add 19 percentage points to operating profit this year, according to a forecast made today. The dollar has gained 19 percent against the krone in the past year, boosting the value of sales from the U.S. when translated into the Danish currency.
Sticking Around
Separately, the 60-year-old CEO denied press reports that said he could step down as soon as this year. Danish newspaper Berlingske said Dec. 29 he’s unlikely to remain in the job through the end of his contract in 2019.
“It’s a non-story,” Rebien Soerensen said today, calling the reports “rumors.”
“I have all intention of fulfilling my contract,” he said. “I still have another four years, I feel reasonably energized and excited about leading the company. There is no news on that front.”
It’s normal for a board of directors to discuss succession planning ahead of time, he added.
Novo Nordisk earlier today reported fourth-quarter profit that beat analysts’ estimates, helped by currency swings and higher sales of its Victoza diabetes therapies. In a statement, the Danish drugmaker reiterated a forecast for an increase of about 10 percent in operating profit this year, excluding currency shifts.
“I look forward to the exciting years ahead,” Rebien Soerensen said.
To contact the reporters on this story: Jonathan Ferro in London at jferro10@bloomberg.net; Albertina Torsoli in Geneva at atorsoli@bloomberg.net To contact the editors responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net Thomas Mulier, Kim McLaughlin
