Europe woes limit growth at Glaxo but outlook unchanged

25th Apr 2012 11:59

Drugs giant GlaxoSmithKline saw a modest increase in group revenue in the first quarter of 2012 as growth in the US, Emerging Markets/Asia Pacific (EMAP) and Japan offset declines in Europe.Total turnover amounted to £6,640m, up 2% at constant exchange rates (CER) or 1% on a reported basis. Pharmaceuticals revenues rose 2% but were affected by ongoing pressure from austerity measures in Europe as well as slower growth in EMAP - this was driven particularly by "continued disruption in the Middle East, but also some broader sensitivity to a more challenging economic environment in a number of EMAP markets" the group said. Vaccines turnover increased by 1% due to similar pressures as well as phasing of tenders and a demanding comparator. Meanwhile, Consumer Healthcare revenue rose 1% as growth was held back by the non-core over-the-counter (OTC) brands that the company is in the process of divesting.The group achieved 6% CER growth in turnover in the US, its biggest market which accounts for £2,151m of sales. Its second-largest geography is Europe, where turnover declined by 5% (CER).Core operating profits were up 3% (CER) at £2,071m, while core earnings per share (EPS) rose 7% to 27.3p. The core operating margin improved slightly from 31% in the first quarter of 2011 to 31.2%.Outlook unchanged despite 'disappointing' figures"Overall a slightly disappointing set of Q1 2012 results, with revenues and core EPS missing consensus estimates by 3% and 6%, respectively," said analysts at US broker Jefferies.Nevertheless, the firm has left its outlook for sales growth and gradual expansion of the core margin unchanged.The firm has confirmed a 6% increase in the first-quarter dividend to 17p and announced that total share buy-backs this year will be in the range of £2-2.5bn, from an earlier range of £1-2bn previously, to be supplemented by cash from the remaining OTC brand disposals. "With only £226m of share repurchases completed in Q1'12, activity will need to significantly accelerate over the remaining quarters to meet management guidance," Jefferies said.By 15:06 in London, shares were down 2.6% at 1,419p.BC