GSK beats Q3 earnings expectations despite missing on revenues

- Earnings ahead, revenues down- Strong cost control boosts results- GSK benefits on sale of Lucozade and RibenaGlaxoSmithKline beat earnings growth expectations in the third quarter by cutting back office and drug research and development costs were amplified by a lower tax rate. With turnover up 1% to £6.51bn during the three months to September 30th, the FTSE 100 drug developer lifted core operating profits 11% to £2.06bn at constant exchange rates (CER) and earnings per share (EPS) 16% to 28.9p at CER.Broker Jefferies pointed out that the core EPS of 28.9p beat consensus of 27.0p by 7%, after revenues were 2% below expectations.In Pharmaceuticals and Vaccines a worse-than-expected sales decline of 61% in China, as the company is investigated by authorities over alleged bribery, led to a 9% fall across its Emerging Markets Asia Pacific (EMAP) segment, which dragged on good growth in Europe, US and Japan.Overall, Pharmaceuticals were down 1% to £4.2bn and vaccines up 3% to £0.99bn. The consumer healthcare division rose 4% to £1.3bn thanks to good growth in oral care and nutrition.Chief Executive Officer Andrew Witty said the stronger increase in core profit, which excludes exceptional and acquisition related figures, was driven by continued strong cost control, including a reduction in R&D expenditure and a continuing effort to reduce certain operating expenses, and a lower-than-expected core tax rate of 23.5%. The top line also benefitted as GSK sold off its Lucozade and Ribena to Japanese drinks maker Suntory for £1.35bn during the quarter. Witty said Chinese operations continued to be disrupted by the investigation and that it was "still too early for us to quantify the longer-term impact of the investigation on our performance in China". Excluding the decline in China sales, he noted the EMAP pharma business grew 5%.Despite wholesaler and retailer de-stocking in the quarter, as well as ongoing and intensifying price competition, Witty is optimistic about growth from the US Pharmaceuticals and Vaccines business thanks to GSK's strong flow of new products and commercial changes. The group reaffirmed its 2013 revenue guidance for core EPS growth of 3-4% on sales growth of around 1%.Shares in GSK were down 0.4% to 1,594.5p at 13:46 on Wednesday. OH