GlaxoSmithKline provides shot in the arm with final results

GlaxoSmithKline posted full year results showing revenues increasing 6% and core earnings per share down 15%, slightly ahead of guidance, and reiterated its confidence that earnings growth would return in 2016 at double-digit levels.

The pension fund favourite said it will pay an 80p dividend for 2015 plus a special dividend of 20p, guiding towards payment of 80p dividends in 2016 and 2017.

Group sales rose 6% to £24bn, or up 1% constant exchange rates, with a 7% fall in pharmaceuticals sales to £14.2bn mainly due to the disposal of the oncology business as part of the Novartis joint venture deal, offset by a 19% gain in vaccines to £3.7bn and 44% gain in consumer healthcare £6bn.

Ignoring the oncology disposal, pro-forma turnover was down 1%, principally from the decline in Advair due to generic competition plus a 15% decline in sales of other established products, which was counterbalanced by growth in new products, particularly the 54% growth from HIV drugs Tivicay and Triumeq.

Pharmaceuticals sales declined most in the US, falling 20% on a reported basis, while Europe was not far behind with a 16% fall, while rest-of-the-world turnover slipped 7%.

Vaccines revenues grew 24% in the US, 23% in Europe and 12% in the rest of the world, with this segment benefitting from sales of the newly acquired products, particularly Bexsero for Meningitis in Europe and the US, and vaccines for flu, infant gastroenteritis and four-in-one infant booster Boostrix.

Consumer healthcare grew 56% in the US, 70% in Europe, and 27% elsewhere, benefiting from sales of the newly acquired products such as Voltaren for pain relief, Otrivin nasal decongestant and Theraflu cold and flu relief, following the formation of the Novartis joint venture.

The 15% decline in core earnings per share to 75.7p was slightly ahead of financial guidance set out last May and reflects short-term dilution from transaction partly offset by integration and restructuring benefits.

Chief executive Andrew Witty reiterated his view that there are significant opportunities for the group's new R&D portfolio of around 40 assets, "of which approximately 80% have the potential to be first in class".

For the coming financial year he highlighted that up to 20 Phase II clinical trials would begin for assets in immuno-inflammation, oncology, respiratory and infectious diseases.

GSK also published its latest estimate for the rate of return in R&D, which has been maintained at 13%.

After an initial dip down on the afternoon announcement of results, shares in the company soon hit their highest level since last August, rising 1.7% on the day to 1,450p.