GlaxoSmithKline Fourth Quarter Performance "Above Expectations"
GlaxoSmithKline’s fourth quarter results for 2013 were “above expectations” thanks to growth in both earnings and revenues. The company also reaped rewards from cost controls and restructuring operations, says Zack Equity Research. GSK performed well above the Zacks’ Consensus Estimate projected revenue of $11.1 billion with its revenue increase of 5% year over year at constant exchange rates (CER) to $11.2 billion.
GSK’s earnings for 2014 were $3.47 per American depository shares (ADS) compared with $2.91 in the year-ago period. While the company’s full year earnings performed below Zacks’ estimate of $3.68, 2013 revenues were up 1% year over year at CER to $41.6 billion.
Pharmaceuticals and vaccine sales inched up 6%, while no change was reported for GSK’s consumer healthcare sales. Buoyed by strong performances in the U.S. and Emerging Markets and Asia Pacific (EMAP), GSK’s pharmaceuticals revenues increased 5% and its vaccine revenues 12%. The company also reaped an incremental cost savings of about £400 million from ongoing initiatives in restructuring. GSK looks to generate another £400 million in savings this year from restructuring and cost-cutting efforts.
The company received FDA approvals for several drugs including Tafinlar, Mekinist, Breo Elipta, and Tivicay, which it launched in 2013. GSK announced plans to launch Anoro Elipta shortly in the U.S. Six Phase III data readouts are expected from the company before the end of 2015. GSK also plans to launch Phase III studies for at least 10 candidates across key areas including respiratory, oncology, and immuno-inflammation.
Investors responded to GSK’s bright performance, giving the company a 1.55% gain in shares. However, Zacks cautioned GSK about potential road bumps ahead. “…We remain concerned about the challenges faced by the company in the form of generic competition and pricing pressure. Additionally, we believe that any strict action enforced by the Chinese government will significantly impact Glaxo’s top line.”
The 2014 outlook for GSK remained positive. Expected approximate 2% revenue growth with core earnings growth of 4% to 8% (both at CER) were projected this year from the year-ago period on an ex-divestment basis.