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LONDON (Alliance News) - GlaxoSmithKline PLC on Wednesday reiterated its full-year earnings and dividend guidance, as it reported a rise in pretax profit for the third quarter of 2016, with revenue boosted by the weak pound.
The pharmaceuticals giant reported a pretax profit of GBP1.27 billion for the third quarter to the end of September, up from GBP867 million the prior year, on revenue of GBP7.54 billion, up from GBP6.13 billion. Operating profit rose 5% to GBP1.43 billion from GBP1.03 billion in the quarter.
For the first nine months of 2016 Glaxo reported a pretax profit of GBP1.52 billion, down from the GBP10.9 million it reported the prior year that was been boosted by exceptional gains from its deal with Swiss peer Novartis AG, on revenue of GBP20.30 billion, up from GBP17.64 billion the year before.
Glaxo saw a strong performance across all three of its businesses year-on-year, driving 8% revenue growth at constant currency,
Revenue from Pharmaceuticals was up 6%, driven by a particularly strong performance from HIV products, whilst respiratory product sales were up 8%. Notably, sales of new pharmaceutical products rose 89% in the quarter, helping to offset a decline in its core asthma and chronic obstructive pulmonary disease drug Seretide/Advair, which has been hit by generic competition.
These new product sales made up 25% of total pharmaceutical sales in the quarter, compared to 14% in the comparative quarter of the previous year.
Meanwhile, revenue in its Vaccines segment was up 20% for the third quarter, boosted by a robust performance in its US and International markets.
Consumer Healthcare revenue rose 5% in the quarter, driven by strong performances across its Oral health and Wellness power brands, although Glaxo noted that overall growth in the US was slower in the third quarter compared to previous quarters.
Overall new product sales in the quarter were GBP1.21 billion, up from GBP1.05 billion in the previous quarter.
At actual exchange rates, revenue was boosted by the weakness of the pound following the UK's vote to leave the European Union in June, and rose 23% in sterling terms in the third quarter.
Core earnings per share for the quarter was 32 pence, up 12% from the previous year at constant currencies, Glaxo said. The company's core results strip out amortisation, impairment, major restructuring costs and legal charges, amongst other costs.
Glaxo continues to expects to deliver core earnings per share percentage growth of 11% to 12% at constant currency for 2016 as a whole. It noted that, if foreign exchange rates hold at the levels seen at the end of the third quarter, it would expect an around 21% boost to its sterling core earnings per share growth for 2016.
It proposed a 19 pence dividend for the third quarter, maintained year on year, and Glaxo continues to expect to pay a total dividend of 80 pence in both 2016 and 2017.
The company also highlighted an improved core operating profit margin in the quarter of 30.7%, compared to 28% the year before, which it attributed to a more favourable product mix across its businesses, cost control, and the delivery of restructuring and integration benefits.
"Our third quarter results reflect strong performances across the group and the sustained progress we have made over the course of 2016 to deliver sales growth of new products, maintain effective cost control and execute on our restructuring and integration plans," said outgoing Chief Executive Officer Andrew Witty in a statement.
"Our most recent review of the group's pipeline reinforces our confidence in the near-term portfolio and the options we have in early-to-mid stage development. With the filing of Shingrix in the US this week, we have completed three of the four regulatory filings targeted for the second half of 2016, and we expect to start four Phase III trials for assets in HIV, respiratory and anaemia before the end of the year," Witty added.
Shares in Glaxo were down 1.9% at 1,599.14 pence Wednesday afternoon, having jumped to 1,660.00p earlier in the session. The stock is up 19% in 2016 to date.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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