GlaxoSmithKline first-quarter sales up 11% but profit falls

GlaxoSmithKline posted a rise in first-quarter sales and core earnings per share amid healthy demand for the company’s new drugs.

First-quarter sales were up 11% in sterling terms to £6.2bn, with core earnings per share 14% higher at 19.8p, beating analysts’ forecasts of 17.9p.

New product sales came in at £821m, up from £269m in the first quarter of 2015. This was driven by HIV, respiratory and meningitis vaccines.

Glaxo said new pharmaceutical product sales now represent 20% of total pharmaceutical sales.

The company said that within its Respiratory portfolio, the growth in sales of new products offset about 70% of the decline in Seretide/Advair.

The company said on Wednesday that it expects 10% to 12% growth in 2016 core EPS at constant currency as it declared a 19p per share dividend for the first quarter. It continues to expect 80p for full year 2016 and 2017.

Pre-tax profit for the quarter fell to £560m from £9.9bn in the first quarter of last year while net income slid to £282m from £8.1bn a year before, which was boosted by proceeds from the group’s three-part transaction with Novartis.

Chief executive officer Andrew Witty said: “This strong first quarter performance demonstrates the momentum we have across the group driven by growth in sales of our new products, effective cost control and execution of our restructuring and integration plans. We also continue to see good progression of novel assets in our core R&D therapy areas.”

Glaxo said its restructuring and integration programme delivered incremental cost savings of £0.4bn and it remains on course for £3bn annual cost savings by the end of next year.

Atif Latif, director of trading at Guardian Stockbrokers, said: “EPS growth of 10-12% (core growth of 8%) is positive in a low rate environment where the ability of companies to at least maintain if not progressively grow dividends is a core objective.”

At 1400 BST, GSK shares were up 2.3% to 1,492.42p.