GlaxoSmithKline posts lower Q1 net profit on increase in generic competition

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The London-based company, however, reaffirmed its fiscal 2008 earnings per share outlook and also declared an interim dividend.

The company managed to beat analysts' forecast, posting profit after tax (PAT) of £1.4 billion for the three months ended March 31, 2008, compared to £1.53 billion in the corresponding period a year earlier. On a statutory basis, PAT was £1.33 billion.

According to the company, quarterly operating profit dropped 5 percent to £2.05 billion from £2.17 billion in the previous year corresponding period.

The company's earnings per share (EPS) for the fiscal quarter fell to 25.5 pence per share, from 26.7 pence per share, in the corresponding period a year earlier. On a statutory basis, EPS stood at 24.2 pence, during the quarter.

Turnover for the quarter amounted to £5.69 billion, as against £5.59 billion, a year-on-year (YoY) rise of nearly 2 percent.

However, in the key US market, revenue fell 10 percent to £2.14 billion.

The company's Board of Directors has declared a first interim dividend of 13 pence per share, higher than 12 pence per share paid in the same quarter of 2007. The dividend will be paid on July 10 to shareholders on the record as on May 2.

Looking ahead, the company said that it continues to expect a mid-single digit percentage decline in full-year 2008 EPS, at constant exchange rates.

"Our performance this quarter was in line with our expectations," said J.P. Garnier, CEO, GlaxoSmithKline. "We continue to see sustained growth from key areas of our business such as Seretide/Advair, vaccines and consumer. However, sales were impacted by generic competition and declines in Avandia sales."

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