GSK Reports Mixed Q1 Results with 23% Decline in Net Profit but 27% Increase in Core Operating Profit

GlaxoSmithKline (GSK) reported a 23% decline in net profit for the first quarter of 2024, with net income decreasing from £1,490 million a year ago to £1,046 million. However, the British pharmaceutical giant experienced a 27% increase in core operating profit and a 10% rise in revenues to £7.4 billion.

GSK's vaccine sales, particularly Shingrix and Arexvy, contributed to the strong performance, with Shingrix sales increasing by 18% and Arexvy generating £182 million in sales. The company's specialty medicines sector also grew by 17%, with HIV medicines being a primary earner.

Despite the decline in net profit, GSK CEO Emma Walmsley noted additional progress in final trials of new drugs during the quarter, enhancing prospects for growth in key therapeutic areas like infectious diseases, HIV, respiratory/immunology, and oncology. The company reported positive data readouts for 4 phase III medicines.

Why this matters: GSK's mixed results reflect the challenges and opportunities facing major pharmaceutical companies as they navigate the post-pandemic landscape. The company's strong performance in vaccines and specialty medicines, coupled with progress in new drug trials, positions it for potential growth in the coming quarters.

Looking ahead, GSK has raised its full-year guidance, expecting turnover growth towards the higher end of its previously guided 5% to 7% range, core operating profit growth of 9% to 11% compared to the previous expectations of 7% to 10%, and core earnings per share growth of 8% to 10% compared to the previously guided 6%-9%. The company expects to declare a dividend of 15 pence per share for the first quarter and 60 pence for the full year.

"This quarter saw further progress in the final trials of new drugs, strengthening our prospects for growth in key therapeutic areas," said Walmsley. GSK looks forward to delivering another year of meaningful growth in sales and earnings in 2024, but cautions that the forward-looking guidance is subject to greater uncertainty and potential material impacts if underlying assumptions are not realized.

Key Takeaways

• GSK reported 23% decline in net profit but 27% increase in core operating profit
• Vaccine sales, particularly Shingrix and Arexvy, contributed to strong performance
• Positive data readouts for 4 phase III medicines, enhancing growth prospects
• GSK raises full-year guidance for turnover, core operating profit, and core EPS
• GSK expects to deliver meaningful growth in sales and earnings in 2024