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GlaxoSmithKline Q1 Profit Down


British healthcare and drug company GlaxoSmithKline Plc (GSK, GSK.L) reported Wednesday a decline in first-quarter profit, while core earnings improved from last year. The company said it continues to expect a gradual improvement in core operating margin this year, with further improvement over the next two to three years.

The company also confirmed a 6 percent increase in first-quarter dividend and said it expects total share repurchases to be 2 billion pounds to 2.5 billion pounds in 2012.

Sir Andrew Witty, chief executive officer of the company said, "This quarter marked continued progress for the Group as we returned to reported sales growth, delivered additional R&D pipeline output and maintained our focus on returns to shareholders through dividend growth and share repurchases."

In the first quarter, profit attributable to shareholders declined to 1.33 billion pounds from 1.53 billion pounds reported last year. On a per share basis, earnings were 26.3 pence, down from 29.6 pence per share a year ago. The company said it has restated its prior-year figures.

However, core earnings that exclude earnings from goodwill, gains or losses from nonrecurring items, pension gains, legal settlements or employee stock options increased 7 percent to 27.3 pence per share from 25.9 pence per share in the prior year. In sterling terms, the growth was 5 percent.

Turnover for the quarter grew 2 percent at constant exchange rates to 6.64 billion pounds from 6.59 billion pounds in the same quarter last year. In sterling terms, the increase was 1 percent.

Pharmaceuticals and Vaccines sales increased 2 percent and Consumer Healthcare sales were up 1 percent from last year. Excluding non-core over-the-counter brands that were identified in 2011 for divestment, turnover grew 7 percent.

GlaxoSmithKline had announced that it inked a pact with Aspen Pharmacare Holdings Limited to divest all of its non-core OTC brands in its international market to the latter for a total consideration of 164 million pounds in cash.

The US Pharmaceuticals and Vaccines business in the recent quarter grew 9 percent from last year. Group sales outside the US and Europe accounted for 39 percent of turnover and increased 3 percent from a year earlier.

The company noted that the European markets remained challenging and Pharmaceuticals and Vaccines sales dropped 6 percent from a year ago.

In Emerging Markets/Asia Pacific or EMAP, saw some pricing pressures, but sales were significantly affected by ongoing instability in the Middle East/Africa region, which resulted a 6 percent fall in sales.

"However, we also continue to see attractive growth opportunities across our businesses and we intend to continue to invest behind them to strengthen the breadth and mix of the Group and its future growth prospects," it added.

The company said its 2012 outlook for sales growth and gradual expansion of core margin remains unchanged. It had projected underlying sales to translate to reported sales growth at constant exchange rates, and expected core operating margin to begin to improve gradually.

The board has also declared a first interim dividend of 17 pence per share, to shareholders of record on May 11, 2012, payable on July 5.

Further, the company stated that its offer for Human Genome Sciences (HGSI) is aligned to long term strategy.

GSK.L is currently trading at 1,415.9 pence, down 41.5 pence or 2.85 percent, on a volume of 6.6 million shares on the LSE.

In the U.S, GSK closed Tuesday's regular trading at $47.21 on the NYSE. In the pre-market activity, the shares are down 3.03 percent.

by RTTNews Staff Writer

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