Dividend pledged to be maintained as company see strong increase in sales.
GlaxoSmithKline Q4 profit trebles to £1.6bn
- Operating profit trebled from £512m to £1.6bn as sales rose 7%.
- The final quarterly dividend is 23p making 80p for the year.
- Shares rose on the news and we maintain our low-risk ‘buy’ recommendation for investors seeking income.
Global pharmaceuticals group GlaxoSmithKline beat expectations with its Q4 figures today. Sales rose 7% to £8.2bn and operating profit trebled from £512m to £1.6bn. The company saw sales of £784m in its new shingles vaccine, Shingrix, and reported good progress on building up its pipeline of new drugs, especially in oncology where it has 16 in development.
The final quarterly dividend of 23p makes 80p for the year and the company promised to repeat that total in 2019 despite the fact it expects earnings to drop by 5-9% at constant exchange rates. That is mainly due to the expected impact from the recent approval of a generic version of the asthma treatment Advair, and the $5.1bn purchase of US biopharma group Tesaro in December.
The shares responded positively to the results having dropped backed slightly ahead of their release. While the Q4 figures show a better than expected performance and the key drug pipeline is building nicely, the forecast for 2019 was clearly cautious in terms of earnings. The commitment to match this year’s dividend is therefore very important and we continue with our ‘buy’ recommendation for investors seeking income and willing to accept a lower level of risk.
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