The top and bottom lines of Teva Pharmaceuticals’ (NYSE:TEVA) profit-loss statement told the story of the main drivers for the second quarter. Revenue was down 2% year over year, but adjusted net income was 15% higher than the year-ago quarter. There are only two things that can cause revenue to decrease while income goes in the opposite direction: expanding margins, and currency changes.
Teva used both, although they’re somewhat related because Teva reports earnings in U.S. dollars, but has much of its expenses in other currencies. As the dollar strengthens, the company’s expenses decrease when reported in dollars, which, in turn, increases margins.
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