GlaxoSmithKline reports solid second quarter results but warns over impact of bribery scandal

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The pharmaceutical company at the centre of a Chinese bribery investigation GlaxoSmithKline (GSK) has reported a second quarter net profit of £1.05bn, and an expected four per cent rise in core earnings per share to 26.3p (release).

Total group turnover in the second quarter was up two per cent to £6.6bn, while it remained flat in the first half of the year at £13.1bn. Excluding disposals in 2012, first half turnover growth this year was two per cent.

In the second quarter of 2013, pharmaceuticals and vaccines turnover grew by five per cent to £1.8bn. Pharmaceuticals turnover was up two per cent, with strong growth in the US and and Asia Pacific emerging markets partially offsetting low sales in Japan, Europe and ViiV Healthcare. Worldwide vaccines turnover was flat with strong performances in the US and Europe against weakness in Asia Pacific emerging markets and Japan. Consumer health turnover was up two per cent.

GSK’s chief executive Sir Andrew Witty said he expected to see sales growth improve across emerging markets going forward, but admitted its performance in China would likely be impacted negatively by the current investigation. He also cautioned against the outlook in Europe and ongoing austerity measures.

Witty added that the company would continue to look for savings and credits them with the growth in core earnings per share. The company expects full year results to show one per cent growth in sales and four per cent growth in earnings per share.

Earlier today, the Chinese official news agency said that more pharmaceutical companies could be implicated in the bribery scandal over the coming days. GSK has said it is cooperating fully with investigations.

Witty spoke with journalists and investors about the China scandal following the report. While he said the company was not afraid to learn lessons and make changes – and indicated he was willing to go to the country when needed – he added that in an organisation of 100,000 people, "unfortunately there's a risk that a few individuals can sometimes do inappropriate things". He said he was "absolutely" sure that 99.9 per cent of GSK employees understood the rules and values of the company.

When asked if he would be taking a bonus this year, he declined to answer and said it would be a matter for the board of directors to decide.

Shares fell slightly ahead of the results. They then rose before resuming their decline as Witty followed up with comments.

Source: Yahoo