LONDON (Alliance News) - Drugs giant GlaxoSmithKline PLC Wednesday reported a drop in revenue and net profit for the first quarter due to asset sales and a decline in sales of pharmaceuticals in the US, but the company also raised its dividend and reiterated its full-year profit guidance despite making its sales guidance more vague.
The company is going through a major revamp, selling off some treatment areas and acquiring assets to bolster others. Going forward, it will be focused on respiratory and HIV treatments. Last week it did a deal with Switzerland's Novartis under which it will sell the Swiss company its oncology portfolio, acquire Novartis' global vaccines business, and create a joint consumer healthcare business.
That means comparison of its results is increasingly difficult.
Its net profit fell to GBP668 million in the three months to end-March, from GBP961 million a year earlier, as revenue declined to GBP5.61 billion, from GBP6.47 billion. That was mainly due to asset sales and masked lower costs that resulted from its restructuring programme.
Excluding the asset sales it made in 2013, its revenue was down 2% at constant exchange rates, hit by a 15% decline in pharmaceuticals sales in the US due to destocking by retailers and wholesales. Sales of pharmaceuticals were up in all the company's other major regions.
Overall sales of vaccines were up 3% and HIV drug sales were up 4%, while consumer healthcare sales were flat due to temporary supply interruptions for some products in the US and Europe.
Glaxo's earnings per share rose 2% to 21.0 pence at constant exchange rates and excluding disposals, as the company continued to cut costs and improve its operating efficiency.
It declared a first dividend for the year of 19 pence, up from 18 pence last year, and said it is still targeting share buybacks of between GBP1 billion and GBP2 billion in 2014 as a whole.
"This quarter has amply demonstrated the very significant changes that are underway in GSK's portfolio. Our strategy to broaden the company's sales base is evidenced with the transition we are making to new products in our core franchises of Respiratory and HIV, further R&D delivery and the 3-part transaction we announced last week with Novartis," Chief Executive Andrew Witty said in a statement.
Glaxo also reiterated its 2014 profit guidance, saying it expects core earnings per share to rise between 4% and 8% at constant exchange rates. However, it now says sales are expected to rise at constant exchange rates and excluding asset sales, dropping the specific growth guidance of about 2% it had previously given.
"The exact level of sales growth will depend on a number of factors, including the roll-out of new products, the level of generic competition to older products, including Lovaza for which a generic approval was granted in April, and the phasing of resupply of products in our Consumer Healthcare business," Witty said.
Glaxo shares were down 1.4% at 1,643 pence Wednesday, one of the biggest declines on the FTSE 100.
By Steve McGrath and Hana Stewart-Smith; stevemcgrath@alliancenews.com; @SteveMcGrath1
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Glaxosmithkline (GSK)