GlaxoSmithKline plc., (GSK) has posted better growth in profits during the quarter ended June 2012 despite lower turnover. Its net profit increased by 15 per cent to £1,319 million from £1,147 million in the same period of last year due to cost cutting measures. Its turnover declined by 3.8 per cent to £6,462 million from £6,720 million. The earnings per share worked out to 25.1 pence as against 21.6 pence in the last period.
GSK's sales in US declined by 6 per cent to £1,662 million from £1,705 million in the last period and its sales in Europe also declined by 8 per cent to £1,236 million from £1,458 million due to challenging macro-economic environment, genericisation and discontinuation of certain products. Its sales in Japan and EMAP improved by 9 per cent and 6 per cent respectively to £1,169 million from £1,115 million. The total pharmaceutical & vaccines sales declined by 3 per cent to £5,205 million from £5,421 million. The sales of consumer healthcare declined to £1,257 million from £1,299 million.
The selling, general and administration expenses declined to £2,187 million from £2,245 million. Its R&D expenditure reduced to £922 million from £1,015 million in the similar period of last year. Its interest cost and taxation also declined to £191 million and £233 million respectively.
Andrew Witty, CEO, said, “Our performance this quarter reflects the challenging macro-economic environment in which we are operating and he continued transition of our product portfolio. Ultimately, the ability of companies in our sector to succeed in this environment and in the future will be determined by how successful they are in accessing growth markets and delivering valuable new product flow on a sustainable basis.”
“On both these dimensions, GSK is making progress. In the last four, years, we have created a more geograaphically balanced business with improving operational and financial efficiency. At the same time, we have developed a substantial late-stage pipeline, which we believe is a material and significant organic growth opportunity for the group. R&D output this last quarter has been remarkable. We received very encouraging phase III data for assets to treat COPD, diabetes and HIV and received regulatory approvals for two new vaccines. Of the 15 assets with phase III data expected by the end of 2012, 12 have now reported some or all of their data, with 10 positive and 2 negative.” he added.
Witty further said, “Several of these programmes are reporting ahead of schedule and we already have the vast majority of data required to support the potential launch of 8 major new drugs and vaccines in the next 24 months. We are investing in a new global 'franchise' model to strengthen our R&D and commercial interface and build our capability to execute global launches of multiple new products. In doing this we aim to improve the consistency of product launch performances at a market-by-market level.”
For the first six months ended June 2012, GSK's net profit declined marginally by 0.8 per cent to £ 2,709 million from £2,731 million and turnover by 1.5 per cent to £13,102 million from £13,306 million. Its pharmaceuticals and vaccines sales declined by 4 per cent to £3,932 million from £4,125 million. Its US sales improved by one per cent to £3,446 million. However, its European sales declined by 7 per cent to £2,531 million from £2,875 million.