Woodford favourite AstraZeneca raises dividend but profits fall

AstraZeneca, a stalwart of many income portfolios including Neil Woodford's, has said it will raise its dividend by 10% despite sounding an earnings warning for 2012.

The pharmaceutical giant reported pre-tax profits fell in Q4 to $2.05bn compared with $2.28bn in 2010.

It also announced it is cutting a further 7,300 jobs and expects earnings to fall this year as patents on key drugs expire and governments in Europe and the US hit prices.

It said it would begin a $4.5bn share buy-back scheme as well as increase its dividend by 10%.

The UK's second-largest drugs firm has long been a mainstay for equity income managers and is Woodford's second largest holding in his Invesco Perpetual Income fund at 8.23% of the portfolio (as at January 2012).

The company said the latest phase of cost cutting would deliver a further $1.6bn in annual benefits by the end of 2014.

Core earnings this year, which exclude some items, are forecast by the company to be between $6.00 and $6.30 a share, down from $7.28 in 2011.

Chief executive David Brennan said: "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 have announced further steps to drive productivity in all areas."