LONDON (Alliance News) - GlaxoSmithKline PLC Wednesday reiterated its expectations that full year earnings per share will be broadly similar to 2013 at constant currencies, as it launched a new restructuring of its global pharmaceuticals business with the aim of saving about GBP1 billion a year and said it would return GBP4 billion to shareholders in 2015 on top of its usual dividend payouts from its recent transaction with Novartis.
The pharmaceuticals giant said it will return GBP4 billion to shareholders via a b-share scheme following the completion of its three part deal with Novartis International AG. That deal is on track to complete in the first half of 2015.
Glaxo said it expects its full year dividend to be 80 pence this year, and it expects to maintain it at that level in 2015. It maintained its third quarter dividend at 19 pence per share.
The company is also planning to explore an initial public offering of a minority shareholding in its joint venture specialist HIV company ViiV Healthcare, in order to "enhance future strategic flexibility and visibility within the group."
Glaxo posted a pretax profit of GBP548 million for the third quarter of 2014, down from GBP1.40 billion a year before, as revenue fell to GBP5.65 billion from GBP6.51 billion. The company said that the impact of formulary and contract changes to its key product, asthma and chronic obstructive pulmonary disease Advair, has been greater than it anticipated and hit its US sales performance in the quarter.
This offset growth in Emerging Markets, Japan, and from ViiV. As a result, it has focused on cutting selling, general and administrative costs and research and development expenses.
The pharmaceuticals giant lowered its full year earnings per share expectations at its interim results in July, now expecting earnings per share for the full year to be broadly similar to 2013. Previously it had guided between 4% to 8% earnings per share growth at constant exchange rates. It retained the revised guidance.
Glaxo signed a three-part deal with Novartis in April, under which it will sell the Swiss company its oncology portfolio, acquire Novartis' global vaccines business, and create a joint consumer healthcare business. It expects this deal to close in the first half of 2015, subject to consultation and necessary approvals.
The company said that following this transaction it is confident it will have "substantial opportunity to generate sustainable, broadly sourced sales growth and improved long-term earnings."
The company also announced that Executive Director Moncef Slaoui has been appointed as Chairman of Vaccines with immediate effect, ahead of the completion of the Novartis deal.
Glaxo is racing to produce a vaccine for Ebola, even though the development of the drug may be too late to handle the current epidemic. On Saturday, the company said that it was developing the vaccine candidate at "an unprecedented rate", with first phase 1 safety trials underway in the US, UK and Mali, with more due to start in the coming weeks.
In September the company's Chinese arm was fined GBP297 million, the biggest fine ever by a Chinese court, concluding investigations by Chinese authorities over allegations that it had paid up to GBP500 million to doctors and hospital executives.
At that time Glaxo said it fully accepted "the facts and evidence of the investigation, and the verdict of the Chinese judicial authorities."
Although it has cleared this hurdle, it is still under investigations for similar allegations across other areas of its operations, with smaller claims having since surfaced Poland, Iraq, Jordan, Lebanon and Syria. It is also under investigation by the UK's Serious Fraud Officer, and the US Department of Justice.
Shares in Glaxo are trading up 4.0% at 1,396.00 Wednesday afternoon.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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Glaxosmithkline (GSK)