GSK delivers improvements in sales, margins and cash flow in 2017

Total EPS 31.4p, +67% AER, +36% CER; Adjusted EPS 111.8p, +11% AER, +4% CER

Issued: London UK 

2017 Financial highlights

  • Turnover £30.2 billion, +8% AER, +3% CER
  • Sales growth across all 3 businesses: Pharmaceuticals £17.3 billion, +7% AER, +3%, CER;
    Vaccines £5.2 billion, +12% AER, +6% CER; Consumer Healthcare £7.8 billion, +8% AER, +2% CER
  • Improved Adjusted Group operating margin of 28.4% (2016: 27.5%). Pharmaceuticals 34.3%; 
    Vaccines 31.9%; Consumer Healthcare 17.7%
  • Total EPS 31.4p, after accounting charges of £1.6 billion related to US tax reform
  • Adjusted EPS 111.8p, +11% AER, +4% CER, in line with 2017 guidance
  • 2017 free cash flow of £3.4 billion (2016: £3.0 billion)
  • 23p dividend declared for quarter; 80p for 2017

2018 financial guidance

  • 2018 Adjusted EPS Guidance: Growth is subject to uncertainty of timing and impact of possible generic competition to Advair in the US:
    - In the event of no substitutable generic competitor to Advair in the US, expect 2018 Adjusted EPS growth to be 4 to 7% CER
    - In the event of a mid-year introduction of a substitutable generic competitor to Advairin the US, expect full year 2018 US Advair sales of around £750 million at CER (US$1.30/£1) with Adjusted EPS flat to down 3% CER
    - Both scenarios reflect the benefit of US tax reform with expected 2018 effective tax rate on Adjusted profits of 19-20%
  • Continue to expect 80p dividend for 2018

Product and pipeline highlights

  • New product sales of £6.7 billion, +51% AER, +44% CER, driven by strong performances from Tivicay and Triumeq in HIV, the inhaled Ellipta portfolio and Nucalain Respiratory and meningitis vaccines
  • Three key approvals: Shingrix vaccine for shingles; Trelegy Ellipta, once-daily single inhaler triple therapy for COPD; Juluca (dolutegravir and rilpivirine), first 2-drug regimen, once-daily, single pill for HIV
  • Preferential recommendation for Shingrix received from US CDC
  • Trelegy Ellipta approved in Europe for COPD
  • Nucala filed in US for eosinophilic COPD
  • Phase III HIV treatment study initiated investigating long-acting 2-drug regimen of cabotegravir plus rilpivirine administered every two months
  • In Oncology, Breakthrough Therapy Designation received from FDA for BCMA antibody-drug conjugate for relapsed and refractory multiple myeloma. Positive BCMA data presented at ASH meeting