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LONDON (Alliance News) - GlaxoSmithKline PLC Wednesday clarified its earnings per share expectations for 2016 and reiterated its dividend plans for the next two years, as it said it had seen an "encouraging start to the year".
The company now expects full year core earnings per share percentage growth of between 10% and 12% at constant currency for 2016, having previously said it expects core EPS growth to hit double digits at constant currency at the time of its full year results in February.
Glaxo reported a pretax profit of GBP560 million for the first quarter of 2016, down significantly from GBP9.92 billion the year before as the company had been boosted by exceptional gains from the sale of its Oncology business to Novartis AG.
Revenue rose to GBP6.23 billion from GBP5.62 billion the year before, as a 1% decline in its pharmaceuticals division was offset by a jump in revenue from its vaccines and consumer health segments, boosted by its deal with Novartis, which was completed in early 2015.
Sales of its biggest seller, asthma and chronic obstructive pulmonary disease drug Advair, fell 19% in the US, and dropped 24% in Europe, where it is sold under the name Seretide. This was due to generic competition for the product in Europe, and a combination of lower volumes and a hit from price and mix in the US. However, Glaxo noted that sales of new respiratory products totalled GBP108 million in the quarter, exceeding the decline in Advair.
Overall new product sales for the quarter were GBP821 million, up from GBP682 million quarter-on-quarter, and up from GBP269 million year-on-year. This was driven by the growth in new respiratory products, new HIV treatments, and meningitis vaccines.
Core earnings per share for the quarter rose 8% at constant currency to 19.8 pence, Glaxo said, signalling an "encouraging" start to the year.
The company said that, if exchange rates were to hold at their March closing rates for the rest of 2016 it would expect an 8% boost to its sterling core earnings per share growth for the year.
Glaxo said its restructuring and integration programme delivered cost savings of GBP400 million in the first quarter, and remains on track for GBP3 billion in yearly cost savings by the end of 2017.
It proposed a dividend of 19 pence for the quarter, maintained from the previous year, and reiterated its expectations for a full year dividend of 80 pence for both 2016 and 2017.
"Overall, the quarter reflects the progress we have made in our strategy and our ability to allocate capital across our three businesses to generate the best returns. Together with the roll out of our new commercial model, we believe the group is well placed to maximise the opportunities, and respond to the competitive pressures and challenging pricing dynamics, that we see in the global healthcare environment," said Chief Executive Officer Andrew Witty in a statement.
Glaxo shares were up 2.4% at 1,494.00 pence Wednesday afternoon, one of the biggest gainers in the FTSE 100.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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