Results announcement for the first quarter 2015

Issued: London, UK

GSK reports Q1 sales of £5.6 billion; Core EPS of 17.3p (-16%) CER

View full Q1 2015 results (PDF)

  • Group revenue expected to grow at a CAGR of low-to-mid single digits over the five year period 2016-2020 on CER basis
    • Vaccines sales expected to grow at a CAGR of mid-to-high single digits
    • Pharmaceuticals sales expected to grow at a CAGR of low single digits with the possible introduction of generic Advair in the US factored into this assessment
    • Consumer Healthcare sales expected to grow at a CAGR of mid single digits
  • Decision taken to retain existing holding in ViiV Healthcare reflecting updated strong positive outlook
  • Transaction cost savings programme to be accelerated with over 50% of total synergies of 
  • £1 billion now expected in 2016 (vs 2017), with programme broadly complete by end of 2017 (vs 2019)
  • Total annual benefits of £3 billion from combination of existing restructuring and synergy programmes, now expected to be largely delivered by end of 2017 within existing cost estimates but with an accelerated rate of expenditure
  • Group core EPS expected to grow at CAGR of mid-to-high single digits over the five year period 2016-2020 on a CER basis:
    • 2015 core EPS expected to decline at a percentage rate in the high teens (CER) primarily due to continued pricing pressure on Advair in US/Europe, the dilutive effect of the transaction and inherited cost base of the Novartis businesses
    • Significant recovery anticipated in 2016 with core EPS percentage growth expected to reach double digits (CER)
  • Group reaffirms commitment to current credit ratings
  • Capital allocation strategy reviewed. Use of cash to be prioritised for ordinary dividends and accelerated investments to realise synergies; as well as providing flexibility to respond to potential put options associated with ViiV Healthcare and Consumer Healthcare; and to accommodate possible introduction of generic Advair in the US
  • Group expects to pay annual ordinary dividend of 80p for each of the next three years (2015-2017)
  • Return of transaction net proceeds to be reduced to £1 billion, paid as special dividend with Q4 2015 ordinary dividend
  • R&D Investor Day confirmed for 3 November 2015
  • Reported Q1 sales £5.6 billion, +1% CER with growth in Vaccines (+10%), Consumer Healthcare (+24%) offset by Pharmaceuticals (-7%):
    • Pro-forma sales by business: Vaccines +3%; Consumer Healthcare +8% benefiting from launch of Flonase OTC and strong Oral health performance; Pharmaceuticals -5% with HIV sales +42% offset by continued sales declines in Advair and Established Products
  • Q1 Core EPS of 17.3p (-16%) CER due to mix pressures on Pharmaceuticals margin and dilutive impact of the transaction, partly offset by ongoing cost reductions and lower core tax rate (20%):
    • Q1 dividend of 19 pence
  • Q1 Total EPS of 167.8p benefit from pre-tax transaction gain of £9.3 billion

Full details with CEO and CFO interviews available in the quarterly results section of this website.

Cautionary statement regarding forward-looking statements

GSK cautions investors that any forward-looking statements or projections made by GSK, including those made in this announcement, are subject to risks and uncertainties that may cause actual results to differ materially from those projected. Such factors include, but are not limited to, those described under Item 3.D 'Risk factors' in the company's Annual Report on Form 20-F for 2014.