GlaxoSmithKline's consumer strength lifts third-quarter results above forecast

GlaxoSmithKline posted third-quarter results with revenue and core earnings per share beating market expectations, though management held full year guidance steady.

Revenues rose 11% to £6.13bn to beat consensus forecasts of £6.07bn and core EPS declines 13% at constant exchange rates to 23p but still beat forecasts of 19p.

A third-quarter dividend of 19p per share was declared, with 80p expected for the full year.

The group's three main business all gave growth a shot in the arm, with consumer healthcare benefitting from the recent switching from prescription to over-the-counter nasal allergy spray Flonase, which contributed to sales growth of 7%.

In spite of a decline in Seretide/Advair sales of £182m, the pharmaceutical and vaccines businesses more than offset this with new product revenues of £591m.

Chief executive Andrew Witty said this demonstrated the progress in transitioning to the new portfolio, where HIV was a standout performer with sales increasing 65%, reflecting continued strong momentum from Tivicay and Triumeq.

“This quarter’s performance reflects continued execution of our strategy," he added, referring to March's completed deal with Novartis, acquiring its vaccines business, creating a 63.5%-owned Consumer Healthcare joint venture and divesting its oncology business. "The benefits of the recent three-part transaction are becoming evident in our sales and earnings performance and we have made good progress on our restructuring and integration programmes during the quarter.

GSK will hold an investor event next week focusing on research and development that will profile further product innovation in its pharmaceutical and vaccine pipelines, which Witty believes offer significant potential to drive long-term performance for the group.

“We remain focused on delivering sustained improvements in operational performance and are confident in our outlook for the rest of this year and a return to earnings growth in 2016,” he concluded.

Merrill Lynch analysts said the numbers "look strong", though pharmaceuticals was "a tad light" due to slightly weaker Advair but vaccines and consumer slightly ahead.

"Nothing spectacular here, but it is a solid set of numbers versus low expectations, and excellent margin with a catalyst to come [from the R&D day on 3 November]."

Shares in GSK spiked 3.29% to 1,412.5p shortly after the results were released on Wednesday afternoon.