GSK plc has announced its final results.
| Broad-based performance drives sales, profits and earnings growth: | |
| • | Total 2023 sales £30.3 billion +5% and +14% ex COVID |
| • | Vaccines sales +25%, +24% ex COVID. Shingrix £3.4 billion +17%, Arexvy £1.2 billion |
| • | Specialty Medicines sales -8%, +15% ex COVID with HIV +13%; General Medicines sales +5% |
| • | Total operating profit and Total continuing EPS for 2023 reflects strong growth, with lower charges for contingent consideration liabilities remeasurement |
| • | Adjusted operating profit +12% (with further positive impact of +4% ex COVID) and Adjusted EPS +16% (with further positive impact of +6% ex COVID). This reflected strong sales ex COVID and higher royalty income, partly offset by increased investment in R&D and new product launches |
| (Financial Performance – 2023 results unless otherwise stated, growth % and commentary at CER, ex COVID is excluding COVID-19 solutions as defined on page 53). | |
| 2023 | Q4 2023 | ||||||||||
| £m | % AER | % CER | £m | % AER | % CER | ||||||
| Turnover | 30,328 | 3 | 5 | 8,052 | 9 | 15 | |||||
| Turnover ex COVID | 30,134 | 12 | 14 | 8,032 | 12 | 17 | |||||
| Total operating profit | 6,745 | 5 | 10 | 573 | (69) | (60) | |||||
| Total continuing EPS | 121.6p | 10 | 16 | 8.6p | (77) | (68) | |||||
| Adjusted operating profit | 8,786 | 8 | 12 | 1,752 | 10 | 21 | |||||
| Adjusted operating margin % | 29.0% | 1.2ppts | 1.8ppts | 21.8% | 0.1ppts | 1.2ppts | |||||
| Adjusted EPS | 155.1p | 11 | 16 | 28.9p | 12 | 25 | |||||
| Cash generated from operations | 8,096 | 2 | 3,681 | 75 | |||||||
| Organic R&D delivery and targeted business development supports future growth: | |
| • | 71 Vaccines and Specialty Medicines now in clinical development, including 18 in phase III/registration |
| • | Strong pipeline progress, with 4 major product approvals: Arexvy RSV vaccine; Apretude for HIV prevention; Ojjaara for myelofibrosis and Jemperli in 1L endometrial cancer |
| • | Targeted business development further strengthens the pipeline including: acquisition of Bellus Health and proposed acquisition of Aiolos Bio (Respiratory), licence agreements with Janssen (Infectious Diseases) and Hansoh Pharma (Oncology) |
| • | Significant late-stage R&D milestones expected in 2024, including: approval of Arexvy in 50-59 year-olds; regulatory submission for meningitis (ABCWY) vaccine; phase III data for depemokimab (severe asthma), Nucala (COPD), gepotidacin (UTIs/gonorrhoea), Jemperli (endometrial cancer) |
| 2024 guidance and 2023/2024 dividends: | |
| • | Expect 2024 turnover growth of between 5 to 7%; Adjusted operating growth of between 7 to 10%; Adjusted EPS growth of between 6 to 9% |
| • | Increased dividend of 16p declared for Q4 2023; 58p FY 2023; 60p expected for 2024 |
| Upgrade to longer-term outlooks: | |
| • | 2021-2026 outlook increased to sales more than +7% CAGR and Adjusted operating profit more than +11% CAGR |
| • | 2031 sales outlook increased to more than £38 billion; Adjusted operating margins broadly stable through dolutegravir patent loss of exclusivity |
Guidance all at CER and excluding COVID-19 solutions
Emma Walmsley, Chief Executive Officer, GSK:“GSK delivered excellent performance in 2023, with clear highlights being the exceptional launch of Arexvy and continued progress in our pipeline. We are now planning for at least 12 major launches from 2025, with new Vaccines and Specialty Medicines for infectious diseases, HIV, respiratory and oncology. As a result of this progress and momentum, we expect to deliver another year of meaningful sales and earnings growth in 2024, and we are upgrading our growth outlooks for 2026 and 2031. We remain focused on delivering this potential – and more – to prevent and change the course of disease for millions of people.”
The Total results are presented in summary above and on page 8 and Adjusted results reconciliations are presented on pages 20, 21, 23 and 24. Adjusted results are a non-IFRS measure excluding discontinued operations and other adjustments that may be considered in addition to, but not as a substitute for, or superior to, information presented in accordance with IFRS. Adjusted results are defined on page 18 and £% or AER% growth, CER% growth, turnover excluding COVID-19 solutions and other non-IFRS measures are defined on page 53, COVID-19 solutions are defined on page 53. GSK provides guidance on an Adjusted results basis only, for the reasons set out on page 18. All expectations, guidance and targets regarding future performance and dividend payments should be read together with ‘Guidance and outlooks, assumptions and cautionary statements’ on pages 54 and 55. 2021-2026 CAGR is for 5 years to 2026 with 2021 as the base year.
2024 Guidance
GSK provides its full-year guidance at constant exchange rates (CER). All expectations and full-year growth rates exclude any contributions from COVID-19 solutions.
| Turnover is expected to increase between 5 to 7 per cent |
| Adjusted operating profit is expected to increase between 7 to 10 per cent |
| Adjusted earnings per share is expected to increase between 6 to 9 per cent |
GSK provides its full-year guidance at constant exchange rates (CER). All expectations and full-year growth rates exclude any contributions from COVID-19 solutions.
| Vaccines | – | expected increase of high single-digit to low double-digit per cent in turnover |
| Specialty Medicines | – | expected increase of low double-digit per cent in turnover |
| General Medicines | – | expected decrease of mid-single-digit per cent in turnover |
Adjusted Operating profit is expected to grow between 7 to 10 per cent at CER, despite a 6 percentage point impact to Operating Profit growth following the loss of Gardasil royalties effective from the beginning of 2024. GSK expects to deliver leverage at a gross margin level due to improved product mix from Vaccines and Specialty Medicines growth and continued operational efficiencies. In addition, GSK anticipates further leverage in Operating Profit due to a step down in SG&A growth to a low single-digit increase. R&D is expected to increase broadly in line with sales to support growth of the pipeline.Adjusted Earnings per share is now expected to increase between 6 to 9 per cent at CER, reflecting higher operating profit and more favourable net finance costs. Expectations for non-controlling interests remain unchanged relative to 2023, and GSK anticipates, as previously communicated, an increase in the adjusted effective tax rate to around 17% following implementation of a global minimum corporate income tax rate aligned with the Organisation for Economic Co-Operation and Development ‘Pillar 2’ initiative.
Additional commentary
The Dividend policy and the expected pay-out ratio remain unchanged. Consistent with this, and reflecting strong business performance during the year, GSK now expects to declare an increased dividend of 16p for Q4 2023 and 58p per share for the full year 2023. GSK’s future dividend policy and guidance regarding the expected dividend pay-out in 2024 are provided on page 39.
COVID-19 solutions
For the full year 2024, GSK does not anticipate any further COVID-19 pandemic-related sales or operating profit. The adverse impact of lower sales of COVID-19 solutions in 2024 is anticipated to be one percentage point of growth in sales and two percentage points in Adjusted operating profit.
2021-26 and 2031 Outlooks
In 2021, GSK set out outlooks and ambitions to shareholders, including for a “step-change” in performance. These followed a significant transformation in GSK’s structure, strategy, capital allocation and culture. Since then, GSK has made significant progress, to deliver consecutive quarters of sales and earnings growth, and invest in new Vaccines and Specialty Medicines, to reshape, strengthen and advance its R&D portfolio, post the demerger of Consumer Healthcare. With this progress made, GSK has today announced upgraded outlooks, from those previously given, for the period 2021-2026 and for 2031. For the period 2021-2026, GSK now expects sales to grow more than 7% on a CAGR basis and adjusted operating profit to increase more than 11%, on the same basis. This compares to previous outlooks of more than 5% and more than 10% respectively. Adjusted operating profit margin in 2026 is now expected to be more than 31%.By 2031, GSK now expects to achieve sales of more than £38 billion on a risk-adjusted basis and at CER. This is an increase of £5 billion compared to the estimate given in 2021 and continues to exclude any contributions from early-stage pipeline assets, further anticipated business development and Blenrep. GSK expects to maintain a continued strong focus on margin improvements, while retaining flexibility to invest in future growth. Recognising that GSK will likely face loss of exclusivity for dolutegravir during 2028 to 2030 in US and EU, with the majority of impact 2029 to 2030, GSK has today stated that it expects operating margins to be broadly stable through this period. GSK expects an effective transition within its HIV portfolio towards new long-acting treatment and prevention therapies, margin mix benefit from growth in higher operating margin Vaccine and Specialty Medicine products, and a continued focus on achievable productivity gains, notably in supply chain and in SG&A.All expectations, guidance and outlooks regarding future performance and dividend payments should be read together with ‘Guidance and outlooks, assumptions and cautionary statements’ on page 54.
If exchange rates were to hold at the closing rates on 24 January 2024 ($1.27/£1, €1.17/£1 and Yen 188/£1) for the rest of 2024, the estimated impact on 2024 Sterling turnover growth for GSK would be -3% and if exchange gains or losses were recognised at the same level as in 2023, the estimated impact on 2024 Sterling Adjusted Operating Profit growth for GSK would be -5%.
Results presentation
A conference call and webcast for investors and analysts of the quarterly results will be hosted by Emma Walmsley, CEO, at 11am GMT (US EST at 6am) on 31 January 2024. Presentation materials will be published on www.gsk.com prior to the webcast and a transcript of the webcast will be published subsequently.Notwithstanding the inclusion of weblinks, information available on the company’s website, or from non GSK sources, is not incorporated by reference into this Results Announcement.
