GlaxoSmithKline rallies as second-quarter earnings beat estimates

Shares in GlaxoSmithKline rallied after the pharmaceutical company posted better-than-expected second-quarter earnings and operating profits, and said it expects to see a significant recovery in core earnings per share next year.

Sales for the period were up 6% at £5.9bn, while core earnings per share came in at 17.3p, above analysts’ expectations of 16.7p, as the company’s AIDS drugs and cost-cutting measures helped to offset declining revenue from its best-selling asthma drug Advair.

Core operating profit fell 4% to £1.35bn, which was a touch higher than analysts’ forecasts.

Net profit, however, dropped a whopping 77% to £149m from £702m in the same period last year.

Still, Glaxo said that it expects to see a recovery in core EPS in 2016, with percentage growth likely to reach double digits as the adverse impacts seen in 2015 diminish and the sales and synergy benefits of the Novartis transaction contribute more meaningfully.

Chief executive officer Andrew Witty said: “This is our first full quarter of performance since completion of the transaction with Novartis and it is encouraging. Our integration and restructuring plans are on track and we remain confident that we can achieve our targets for this year and return the group to earnings growth in 2016.”

Glaxo bought Novartis' vaccine business late last year.

At 12:49, shares were up 3.2% at 1,371.50p.