GSK PLC (LON/NYSE) has announced its 1st quarter results.
| Broad-based performance drives sales, profits and earnings growth: | |
| • | Total Q1 2024 sales £7.4 billion +10% and +13% ex COVID |
| • | Vaccines sales +16%, +22% ex COVID. Shingrix £0.9 billion +18%, Arexvy £0.2 billion |
| • | Specialty Medicines sales +17%, +19% ex COVID with HIV +14% |
| • | General Medicines sales +1%. Trelegy £0.6 billion +33% |
| • | Total operating profit and Total EPS for Q1 2024 reflected higher charges for CCL(2) remeasurement, partly offset by strong Core(1) growth |
| • | Core operating profit +27% (with further positive impact of +8% ex COVID) and Core EPS +28% (with further positive impact of +9% ex COVID). This reflected strong sales and SG&A leverage, partly offset by increased investment in R&D and lower royalty income |
| • | Cash generated from operations exceeded £1 billion with free cash flow of £0.3 billion |
| (Financial Performance – Q1 2024 results unless otherwise stated, growth % and commentary at CER, ex COVID is excluding COVID-19 solutions as defined on page 47). | |
| Q1 2024 | |||||
| £m | % AER | % CER | |||
| Turnover | 7,363 | 6 | 10 | ||
| Turnover ex COVID | 7,362 | 8 | 13 | ||
| Total operating profit | 1,490 | (28) | (18) | ||
| Total operating margin % | 20.2% | (9.7ppts) | (7.8ppts) | ||
| Total EPS | 25.7p | (30) | (19) | ||
| Core operating profit | 2,443 | 17 | 27 | ||
| Core operating margin % | 33.2% | 3.1ppts | 4.6ppts | ||
| Core EPS | 43.1p | 16 | 28 | ||
| Cash generated from operations | 1,126 | >100 | |||
| R&D delivery and targeted business development supports future growth: | |
| • | Strong pipeline progress with positive phase III read outs for gepotidacin in uncomplicated urogenital gonorrhoea, Cabenuva in HIV treatment, Jemperli in endometrial cancer, and Blenrep in multiple myeloma |
| • | Innovative Vaccine portfolio further strengthened with regulatory submission acceptances for Arexvy for prevention of RSV in adults 50-59 (US), new meningococcal ABCWY vaccine candidate (US), and Shingrix for prevention of shingles in at-risk adults >18 (China) |
| • | US FDA Fast Track designation received for bepirovirsen in chronic hepatitis B |
| • | New positive data for CAB-ULA as ultra long-acting treatment for HIV supports progression and transition of HIV portfolio for long-term growth |
| • | US FDA regulatory submission accepted for priority review for Jemperli to treat endometrial cancer in broader patient populations |
| • | Acquisition of Aiolos Bio completed, expanding respiratory biologics pipeline with AIO-001, a potentially best-in-class long-acting TSLP monoclonal antibody for treatment of asthma |
| 2024 guidance updated and dividends: | |
| • | Now expect 2024 turnover growth towards the upper part of 5% to 7% range; Core operating profit growth of 9% to 11% (previously 7% to 10%); Core EPS growth of 8% to 10% (previously 6% to 9%) |
| • | Dividend declared of 15p for Q1 2024; 60p expected for Full Year 2024 |
Guidance all at CER and excluding COVID-19 solutions
Emma Walmsley, Chief Executive Officer:“We have made a strong start to 2024, with another quarter of excellent performance and continued pipeline progress, including positive data read outs for 4 phase III medicines. These, together with other R&D achievements, mean we have strengthened prospects for growth in all of our key therapeutic areas this quarter: infectious diseases, HIV, respiratory/immunology and oncology. We expect this strong momentum to continue, and look forward to delivering another year of meaningful growth in sales and earnings in 2024.”
The Total results are presented in summary above and on page 8 and Core results reconciliations are presented on pages 20 and 21. (1) GSK has made an update to its reporting framework in Q1 2024 which is to change the description of Adjusted results to Core results to align with European peers in the pharmaceutical industry but with no change to the basis or figures. Core results are a non-IFRS measure that may be considered in addition to, but not as a substitute for, or superior to, information presented in accordance with IFRS. The following terms are defined on page 47: Core results, £% or AER% growth, CER% growth,COVID-19 solutions, turnover excluding COVID-19 solutions; and other non-IFRS measures. GSK provides guidance on a Core 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 page 49. (2) Contingent consideration liability is abbreviated to CCL.
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.
GSK has started 2024 strongly, with business momentum across all product areas, particularly in Vaccines and Specialty Medicines, including sales contributions from newly launched vaccines and medicines Arexvy and Ojjaara respectively. General Medicines, particularly Trelegy, also performed better than expected. Along with a favourable product mix, GSK benefitted in the quarter from a successful Zejula royalty dispute appeal, and we also expect royalty income to be slightly higher for the full year. As a result, GSK has upgraded its full-year 2024 guidance.
| All Guidance excludes the contributions of COVID-19 solutions | Current 2024 guidance at CER | Previous 2024 guidance at CER |
| Turnover | Increase towards the upper part of the range of between 5% to 7% | Increase between 5% to 7% |
| Core operating profit | Increase between 9% to 11% | Increase between 7% to 10% |
| Core earnings per share | Increase between 8% to 10% | Increase between 6% to 9% |
GSK expects first half 2024 sales growth to be higher than second half 2024 due to the comparator to H2 2023, which benefitted from newly launched vaccines and medicines. In particular, second half 2024, compared to the same period in the prior year, is expected to be influenced by the 2023 launch dynamics and initial channel inventory build attributable to Arexvy. In addition, we expect the majority of Shingrix sales in China in to be in the first half 2024.
This guidance continues to be supported by the following turnover expectations for full-year 2024 at CER:
Core Operating profit is expected to grow between 9 to 11 per cent at CER (previously 7 to 10 per cent increase), despite a 6 percentage point impact to Operating Profit growth following the loss of the majority of Gardasil royalties effective from the beginning of 2024. GSK continues to expect 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 continues to anticipate further leverage in Operating Profit due to a step down in SG&A growth to a low single-digit increase. R&D continues to be expected to increase broadly in line with sales to support growth of the pipeline.
Core Earnings per share is now expected to increase between 8 to 10 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 continues to anticipate an increase in the Core 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.
2021-26 and 2031 Outlooks
In January 2024 GSK set out improved outlooks for the period 2021-2026 and for 2031. Please see 2023 Full year and fourth quarter results on gsk.com.
Additional commentary
Dividend policy
The Dividend policy and the expected pay-out ratio remain unchanged. Consistent with this, and reflecting strong business performance during the quarter, GSK expects to declare a dividend for Q1 2024 of 15p per share and for the full year 2024 60p.
COVID-19 solutions
For the full year 2024, GSK does not anticipate any further COVID-19 pandemic-related sales or operating profit. Consequently, and in comparison to 2023, it is anticipated that the full year growth in sales and Core operating profit will be adversely impacted by one and two percentage points, respectively.
Exchange rates
If exchange rates were to hold at the closing rates on 31 March 2024 ($ 1.26/£1, € 1.17/£1 and Yen 191/£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 Core 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 12 noon BST (US EST at 7am) on 1 May 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.
