GlaxoSmithKline (NYSE: GSK) is back in the black.
The global drug manufacturer which operates its U.S. headquarters in Research Triangle Park, reported a profit of 45 cents per share for the fourth quarter early Tuesday.
That’s a sharp rebound from a 12-cent per share loss a year ago.
The profit also slightly beat analysts’ expectations, according to Bloomberg news.
However, one analyst was cautious about the news.
Keith Bowman, analyst at Hargreaves Lansdown Stockbrokers, said the fourth-quarter results were at the lower end of expectations.
“Pricing pressure has been seen across a number of the group’s markets, while the company’s R&D efforts are yet to yield what the group itself sees as an acceptable return,” Bowman said.
Revenues for pharmaceuticals and vaccines increased some 4 percent. However, sales in the U.S. were flat and fell 4 percent in Europe. Emerging markets, Japan and Asian sales were up sharply.
Overall revenues declined 3 percent.
Cost-cutting and restructuring enabled GSK to return to profitability.
For the three months ending Dec. 31, GSK reported a net profit of 1.25 billion pounds ($1.98 billion) compared with a loss of 633 million pounds a year earlier.
For the full year, net profit more than trebled, from 1.63 billion pounds in 2010 to 5.26 billion pounds ($7.8 billion) last year. Revenue was down 3.5 percent.
GSK also said it would repurchase as much as $3.2 billion of its stock this year. It repurchased a similar amount in 2011.
“The market was expecting a larger share buyback and the guidance isn’t very detailed in terms of the growth they’re hoping to deliver,” Navid Malik, an analyst at Cenkos Securities Plc, said in a telephone interview with Bloomberg.
The company also said it would boost a dividend for shareholders following the sale of 17 consumer brands in December.
CEO Touts Progress, Drug Pipeline
GSK Chief Executive Officer Andrew Witty in a statement used the quarterly performance to tout his performance as CEO. However, in a later discussion with the media, he noted frustration in looking for acquisitions.
“We kissed an awful lot of frogs last year, but none of them turned into princes,”Witty said, referring to the drugmaker’s search for purchases.
“Three and a half years ago, we set out to fundamentally change GSK to create a more balanced business capable of addressing the market challenges we face, delivering sustainable financial performance and providing new value to patients and consumers.
“Our record in 2011 demonstrates that we are succeeding. During the year we delivered underlying sales growth of 4%, strong cash generation, significant R&D progress and we were able to increase shareholder returns through ordinary dividend growth of 8%, plus a supplemental dividend of 5p and £2.2 billion [some $3.5 billion] of share buy backs. In total, we distributed £5.6 billion [some $8.5 billion] in cash to shareholders in 2011 – an increase of 75% versus 2010.
“As we go into 2012, we are mindful of the potential pressures we face given the current global political and economic environment. However we continue to expect to drive further shareholder returns as we seek to grow sales across our broadly based business and improve operational leverage and financial efficiency to deliver strong cash generation. We will also continue to invest appropriately in the business to generate sustainable and profitable sales growth, using strict returns criteria.
“We expect further delivery from our R&D organisation in 2012. I am pleased to confirm that of the
15 late-stage drugs and vaccines we highlighted last year, we have received some or all of the data on nine of them. Most importantly, one has already filed and we have three more ready to file. In addition, our quadrivalent flu vaccine, which was not included in the 15, has progressed very quickly and will also file very shortly. We expect Phase III development programmes to complete for a further six assets and indications this year. All this comes with increasing signs that we can replenish our pipeline on an ongoing basis.”
Read the earnings report here.
(The AP and Bloomberg contributed to this report.)
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