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Financial highlights |
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Group sales: £7.3 billion, flat AER, +4% CER. Pharmaceuticals sales £4.2 billion, -3% AER, +1% CER; Vaccines £1.3 billion, +13% AER, +16% CER; Consumer Healthcare £1.8 billion, -1% AER, +3% CER |
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Adjusted Group operating margin: 28.8%, +0.3 percentage points AER, +0.8 percentage points CER. Pharmaceuticals: 35.3%, Vaccines 28.5%, Consumer Healthcare 19.3% |
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Adjusted R&D £868 million, -18% AER, -15% CER reflecting benefits of prioritisation, comparison with utilisation of Priority Review Voucher in Q2 2017 and phasing of new investments |
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Total EPS: 9.0p (Q2 2017: loss per share 3.7p) reflecting reduced impairments and lower charges for restructuring and changes in valuations of Consumer Healthcare and HIV businesses |
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Adjusted EPS growth +3% AER, +10% CER driven by operating leverage, continued financial efficiencies and reduction in minorities following completion of Consumer Healthcare buyout on 1 June 2018 |
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H1 2018 free cash flow £0.8 billion (H1 2017: £0.4 billion) |
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19p dividend declared for quarter. Continue to expect 80p for FY 2018 |
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New major restructuring programme expected to deliver annual cost savings of £400 million by 2021. Charges expected to be £0.8 billion cash and £0.9 billion non-cash over next 3 years |
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Now expect 2018 Adjusted EPS growth of 7 to 10% at CER if no substitutable generic competitor to Advair introduced in US in 2018. If a substitutable generic competitor to Advair is introduced in the US from 1 October, expect 2018 Adjusted EPS growth of 4 to 7% at CER |
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Product and pipeline highlights |
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Sales of Ellipta products, including Trelegy, £509 million +20% AER, +26% CER. Nucala sales £141 million +93% AER, +>100% CER |
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Tivicay and Triumeq sales of £1.1 billion +10% AER, +15% CER. New launch Juluca £24 million |
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Positive results of GEMINI study of new 2-drug regimen dolutegravir+lamivudine supports use in treatment naïve patients |
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Shingrix sales £167 million. Now expect 2018 sales of £600-650 million |
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R&D update |
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New approach to R&D announced focusing on science related to the immune system, the use of genetics and investments in advanced technologies |
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Strategic collaboration with 23andMe announced to take advantage of novel genetic insights to enhance selection of drug targets and clinical development of new medicines |
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GSK currently has over 40 NMEs in its pharmaceutical pipeline with significant data readouts 2018-2020 |
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Several assets expected to launch 2018-20 including two treatments for HIV: dolutegravir+lamivudine and cabotegravir+ripilvirine; and GSK's most advanced new oncology treatment 2857916 (BCMA antibody-drug conjugate) |
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'916 pivotal studies started for 4L use. Initial 2L study, for use in combination with standard of care, to start H2 2018 |
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US FDA approval received for Krintafel (tafenoquine), a radical cure of P. vivax malaria |
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Q2 2018 results |
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Q2 2018 |
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Growth |
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H1 2018 |
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Growth |
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£m |
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£% |
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CER% |
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£m |
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£% |
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CER% |
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Turnover |
7,310 |
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– |
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4 |
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14,532 |
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(1) |
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4 |
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Total operating profit |
779 |
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>100 |
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>100 |
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2,019 |
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19 |
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39 |
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Total earnings per share |
9.0p |
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>100 |
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>100 |
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20.2p |
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14 |
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41 |
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Adjusted operating profit |
2,102 |
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1 |
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7 |
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4,025 |
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(1) |
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8 |
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Adjusted earnings per share |
28.1p |
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3 |
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10 |
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52.7p |
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1 |
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11 |
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Net cash from operating activities |
1,362 |
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35 |
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2,225 |
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3 |
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Free cash flow |
492 |
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>100 |
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821 |
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>100 |
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The Total results are presented under 'Income Statements' on page 42 and Adjusted results reconciliations are presented on pages 19,27 and 64 to 67. Adjusted results are a non-IFRS measure that allows key trends and factors in the Group's performance to be more easily identified by shareholders. Non-IFRS measures may be considered in addition to, but not as a substitute for, or superior to, information presented in accordance with IFRS. The definitions of £% or AER% growth, CER% growth, Adjusted results, free cash flow and other non-IFRS measures are set out on page 39. All expectations and targets regarding future performance should be read together with “Assumptions related to 2018 guidance and 2016-2020 outlook” and “Assumptions and cautionary statement regarding forward-looking statements” on page 40. |
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Q2 2018 Performance
Emma Walmsley, Chief Executive Officer, GSK said: “GSK has delivered encouraging results across the company this quarter with CER sales growth in each of our three global businesses, an improved Group operating margin, Adjusted EPS growth of 10% (CER) and stronger free cash flow.
“Sales growth reflected strong commercial execution of the three new launches we have prioritised: Trelegy Ellipta which provides three medicines in a single inhaler to treat COPD; Juluca, the first 2-drug regimen, once-daily, single pill for HIV, helping to reduce the amount of medicines needed, and Shingrix, which represents a new standard for the prevention of shingles. We are increasing our expectations for sales of Shingrix in 2018 to £600-650 million.
“Focused improvements in operating performance have helped deliver increases in earnings and cash flow. Free cash flow for the year to date was £0.8 billion and we are announcing a dividend of 19p for the quarter. We continue to expect to pay a dividend of 80p for 2018.
“With the recent new product launches, development of the new R&D approach and the successful buyout of the Consumer business, we have evaluated the Group's cost base and what is required to deliver competitive long-term growth and performance in each of the Group's three businesses. As a result, we are today announcing a new major restructuring programme, which aims to significantly improve the competitiveness and efficiency of the Group's cost base with savings delivered primarily through supply chain optimisation and reductions in administrative costs.
“We are today upgrading our guidance for CER growth in Adjusted earnings per share for 2018. This reflects increased sales expectations for Shingrix, the positive effect of the completed Consumer Healthcare buyout as well as the delay of a potential generic version of Advair in the US, partly offset by the continuing pricing pressures in Respiratory. We remain increasingly confident in our ability to deliver mid to high single digit growth in Adjusted EPS CAGR 2016-2020 (at 2015 CER).”
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