Glaxo increases 2013 Q1 dividend by 6%

DividendMax Ltd.

Glaxo increases 2013 Q1 dividend by 6%


Group sales -2% reflecting continued contribution from key growth drivers offset by expected demanding prior year comparisons:

  • Sales +2% excluding divestments (primarily Vesicare and non-core OTC brands)
  • Pharmaceuticals and Vaccines sales -2%: US -6% (+4% excl. Vesicare with strong respiratory and oncology performances), Europe -3%, EMAP +8%, Japan -8% (+11% excl. Cervarix)
  • Consumer Healthcare +1% (+6% excluding divestments)

Continued R&D pipeline progress:

  • Positive FDA Advisory Committee recommendation for use of Breo Ellipta in treatment of COPD; FDA Action date 12 May
  • MEK monotherapy, MEK/BRAF combination use and albiglutide filed in Europe; dolutegravir granted Priority Review in US; Anoro Ellipta filed in Japan

Continued delivery of financial efficiencies, strong cash generation and returns to shareholders:

  • Adjusted net cash inflow from operating activities of £1.4 billion (Q1 2012: £1.1 billion)
  • Initial phases of new major change programme, including European restructuring, progressing well
  • Q1 core tax rate 22.4% reflecting benefit of US R&D tax credit; continue to expect full year core tax rate of around 24%
  • Q1 dividend: 18p, +6%; continuing to target share repurchases for the year at £1-2 billion

Further measures to drive strategic focus and improve growth profile:

  • Strategic review of Lucozade and Ribena completed; decision to pursue divestment subject to appropriate value realisation
  • Pharmaceutical tail brands (with 2012 sales of around £3 billion from over 50 brands) to be formed into a Global Established Products portfolio; co-ordinated and reported separately from January 2014

2013 expectations for sales growth (~1%) and core EPS growth (3-4%) unchanged (both at CER)

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