Pharmaceutical firm GlaxoSmithKline on Wednesday said it generated stable revenue in 2021 and is on track to demerge a ‘new world-leading’ GSK Consumer Healthcare business by mid-2022.
For 2021, total sales were £34.11 billion, up slightly from £34.10 billion in 2020 and pretax profit was down to £5.44 billion from £6.97 billion. The revenue figure was in line with market forecasts.
Adjusted operating profit was £8.82 billion in 2021, down from £8.91 billion in 2020.
Glaxo declared a 23 pence per share dividend for the fourth quarter, raising the total payout for 2021 to 80p.
Looking ahead for 2022, new GSK - meaning excluding the consumer business - expects sales to grow by between 5% to 7% at constant exchange rates and adjusted operating profit to grow by between 12% to 14% at constant currency as compared with 2021.
Assuming global economies and healthcare systems approach normality as the year progresses, Glaxo said it expect sales of Specialty Medicines to grow 10% at constant currency and sales of General Medicines to show a slight decrease. Glaxo said this was ‘primarily reflecting increased genericisation’ of established Respiratory products. Vaccines sales are expected to grow at a low teens percentage at for the year as a whole.
‘We have ended the year strongly, with another quarter of excellent performance driven by first-class commercial execution, and we enter 2022 with good momentum. This is going to be a landmark year for GSK, with a step-change in growth expected and multiple R&D catalysts, including milestones on up to 7 key late-stage pipeline assets. 2022 is also the year when we demerge our world-leading Consumer Healthcare business,’ Chief Executive Officer Emma Walmsley said.
‘At our capital markets event later this month, we will set out the future growth ambitions and highly attractive financial profile of this business, and the outstanding opportunity it provides for shareholders,’ Walmsley added.
Glaxo said the capital markets day on February 28 will provide detailed financial information for GSK Consumer Healthcare.
The company's update on the demerger follows its rejection of three bid approaches for the consumer business by Unilever.
Glaxo shares were up 0.2% early Wednesday.
Here is what you need to know at the London market open:
FTSE 100: up 0.5% at 7,602.75
Hang Seng: up 2.1% at 24,829.99
Nikkei 225: closed up 1.1% at 27,579.87
S&P/ASX 200: closed up 1.1% at 7,268.30
DJIA: closed up, 1.1%, at 35,462.78
S&P 500: closed up 0.8% at 4,521.54
Nasdaq Composite: closed up 1.3% at 14,194.46
EUR: flat at $1.1410 ($1.1413)
GBP: soft at $1.3545 ($1.3551)
USD: down at JP¥115.45 (JP¥115.60)
Gold: firm at $1,826.55 per ounce ($1,825.73)
Oil (Brent): up at $90.61 a barrel ($90.28)
(changes since previous London equities close)
ECONOMICS AND GENERAL
Wednesday's key economic events still to come
0700 EST US MBA weekly mortgage applications survey
1000 EST US monthly wholesale trade
1030 EST US EIA weekly petroleum status report
UK Prime Minister Boris Johnson will face members of Parliament on Wednesday after tinkering with his top team as he looks to stave off a confidence vote and lay the foundations for the next election battle. After months of being dogged by partygate allegations and a fresh controversy over his Jimmy Savile remarks, Johnson opted to embark on a mini-reshuffle on Tuesday as he attempts to regain his grip on power. Expected to join the PM on the frontbench for Prime Minister's Questions is new Chip Whip Chris Heaton-Harris. The long-time ally of Johnson replaces Mark Spencer, who was moved to Leader of the Commons after a series of missteps in managing the Conservative parliamentary party. Spencer's predecessor Jacob Rees-Mogg was shuffled into the newly minted role of Minister for Brexit Opportunities, in a move seen as an attempt to appease the Tory right-wing faction.
Germany's trade surplus narrowed for the fifth year in a row in 2021, as a global supply crunch hampered exports, including in its key auto sector. The trade balance of Europe's biggest economy showed a surplus of €173.3 billion last year, down from €180.4 billion in 2020, the federal statistics office Destatis said.
BROKER RATING CHANGES
JPMorgan cuts Rightmove to 'underweight' (neutral) - price target 565 (753) pence
JPMorgan cuts Auction Technology to 'neutral' (overweight) - price target 1,041 (1,471) pence
Barclays cuts Chemring to 'equal weight' (overweight) - price target 300 (380) pence
Barclays cuts boohoo to 'underweight' ('equal weight') - target 85 (135) pence
COMPANIES - FTSE 100
Barratt Developments said it delivered an excellent first half driven by a strong rebound in construction activity in the UK. For the six months to December 31, revenue was £2.25 billion, up from £2.49 billion at the same time in 2020 and pretax profit edged higher to £432.6 million from £430.2 million. Barratt declared an interim dividend of 11.2 pence, up from 7.5p. Total completions were down to 8,067 homes from 9,077 - reflecting the ‘unusually high’ completions in the prior period. The UK's largest housebuilder by volume said it is on track to deliver total home completions of 18,000 to 18,250 in financial 2022, an increase of 250 homes on previous guidance and in excess of the total home completions delivered in financial 2019. ‘Macro economic uncertainties remain, most notably around rising inflation and interest rates in the wider UK economy. As a business we also face higher taxation, the ongoing challenges around build cost inflation and the future withdrawal of Help to Buy, which will begin to impact reservations in Autumn 2022, as the scheme draws to a close in March 2023,’ said Chief Executive Officer David Thomas.
Anglo American said its new Aquila steelmaking metallurgical coal mine is on schedule and on budget, marking the project's final stages of construction and commissioning. The mine, located near Middlemount in central Queensland in Australia, extends the life of Anglo American's existing Capcoal underground operations by seven years, after the company's nearby Grasstree mine reached its end of life in recent weeks. Themba Mkhwanazi, CEO of Bulk Commodities, said: ‘We have delivered the Aquila project on time and within our budgeted attributable cost of $226 million. This new mine will have a total average annual saleable production of around five million tonnes of premium quality hard coking coal and benefits from low capital intensity as we are using the existing infrastructure and systems from our adjacent operations. Aquila offers us highly attractive returns and margins at conservative long term consensus prices.’
COMPANIES - FTSE 250
Homewares retailer Dunelm raised its interim dividend by 17% and declared a special payout, amid strong half-year results. Dunelm will pay 14.0 pence per share for the six months that ended December 25, up from 12.0p a year before. It also will pay a special dividend of 37.0p, which it said was ‘to return to leverage in line with published capital policy’. Dunelm said pretax profit in the half-year was £140.8 million, up 25% on £112.4 million a year before, on £795.6 million in revenue, up 11% on £719.4 million. Gross margin improved by 80 basis points, the retailer said, due to higher full-price sales in the recent period and the comparison period being hurt by store lockdowns. Dunelm said full-year pretax profit will be in line with recently upgraded consensus, which it put at £206 million.
COMPANIES - OTHER UK
Talks between mutual insurers Royal London and LV= over a potential merger have ended with both sides walking away. The mutuals started discussions shortly after an attempted takeover of LV= by private equity firm Bain Capital in December failed to win enough support from its 1.2 million members. But on Wednesday, Royal London appeared to suggest it had been misled by LV= over the company's need to merge or risk going bust, whilst LV= said the different business models made a merger impossible. Royal London Chief Executive Barry O'Dwyer said: ‘Mutuals are owned by their customers and are run for their benefit. ’Our offer to preserve LV='s mutuality through a merger with Royal London was based on an understanding that LV= did not have a viable future as an independent company.‘ LV= said a deal would not be possible because ’our different mutual models mean such a merger would not be in the best interests of LV= members.‘
COMPANIES - GLOBAL
Honda Motor's profit dropped 32% in the last quarter amid rising material costs and a shortage of computer chips. The Japanese car maker reported a profit for the three months to December of JP¥192.9 billion, about £1.1 billion, down from JP¥284 billion a year before. The Tokyo-based company said quarterly sales slipped 2% to JP¥3.7 trillion, about £23.6 billion. Like the rest of the world's car makers, Honda's manufacturing has also been affected by delays due to coronavirus restrictions. Japan's top car company, Toyota, reported a similar drop in profit. Honda said it expects the challenges to persist. Rising material costs are also a problem, but the company said cost-cutting efforts have allowed it to raise its profit projection.
Wednesday's shareholder meetings
Contango Holdings PLC - AGM
Euromoney Institutional Investor PLC - AGM
Finsbury Growth & Income Trust PLC - AGM
Grainger PLC - AGM
JPMorgan Asia Growth & Income PLC - AGM
Oxford MetriCredit Suisse PLC - AGM
Petra Diamonds Ltd - special meeting re framework agreement
Schroder UK Mid Cap Fund PLC - AGM
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