GlaxoSmithKline pins hopes on return to normality as quarterly turnover slides

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GlaxoSmithKline PLC (LON:GSK) has reiterated guidance, hoping that healthcare systems and consumer trends will approach normality in the second half of the year, after posting weak first-quarter results.


Turnover is expected to be either flat or rise up to 2% for the Pharmaceuticals and Vaccines businesses, and advance by 2-5% for Consumer Healthcare excluding brands divested and under review.


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Adjusted earnings per share (EPS) are expected to increase 5-9% while the outlook for 2022 remains unchanged, with “meaningful” improvements forecast for revenues and margins.


Pipeline plans


The FTSE 100 group said it is confident in the underlying demand for its Vaccine products, where it eyes strong recovery and contribution to growth in the second half of the year, notably from shingles jab Shingrix.


It continues to invest in its pipeline, which recently saw the launch of Cabenuva, the world’s first and only long-acting HIV treatment, approvals of HIV treatment Rukobia and cancer treatment Jemperli (dostarlimab) as well as positive regulatory opinion for lupus antibody Benlysta.


It’s also at final-stage trials for a vaccine for RSV in older adults, GSK ‘294 for severe asthma and an adjuvanted COVID-19 vaccine with Medicago.


Changes ahead for dividend policy


The pharma giant said it is on track to create a standalone Consumer Healthcare company in 2022, with more details to be announced at the investor update on 23 June.


The board declared a 19p dividend for the first quarter and continues to target an 80p per share payout this year.


In June, it will announce a new dividend policy that will set lower distributions than current levels.


Quarterly figures


In the three months to 31 March, turnover slid 18% to GBP7.4bn, with Pharmaceuticals down 12% to GBP3.9bn, Vaccines down 32% to GBP1.2bn with Shingrix tumbling 47%, and Consumer Healthcare down 19% to GBP2.3bn.


Trading was hit by governments prioritising COVID-19 vaccine rollouts and a weak cold/flu season because of efforts to stop viruses spreading.


Adjusted EPS fell by 39% to 22.9p and profit before tax shed 17% to GBP1.5bn.


“GSK endured a pretty lacklustre 2020 following a number of pipeline setbacks and Covid-19 disruption. Worryingly, their 2021 performance looks all too familiar,” said Sebastian Skeet, senior analyst at Third Bridge.


“Not only have existing challenges such as a muted Shingrix recovery, late-stage pipeline setbacks, and increased competition around key on-market assets persisted at GSK, but we have seen additional pressures in the form of currency and shareholder activism.”


“Whilst GSK will point to positives such as their Benlysta trials and RSV vaccine candidate, our experts are concerned that the healthcare giant’s may be unable to plug the gap when key HIV assets go off-patent.”


Shares were flat at 1,343p on Wednesday at noon.

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