LONDON -- GlaxoSmithKline
During February, GSK's full-year results reported a return to profit for the final quarter of 2011, following various restructuring and efficiency savings. Net profit was 1.28 billion pounds compared with a loss of 633 million pounds for the previous year, and the company's ordinary dividend was lifted by 8% to 70 pence per share.
At the time, Sir Andrew Witty, GSK's chief executive officer, was very optimistic about the year ahead for shareholders. He said the company would "continue to allocate capital where it can deliver the best returns for our shareholders. Our commitment is to use free cash flow to support increasing dividends, share repurchases or, where returns are more attractive, bolt-on acquisitions."
April marked continued progress for GSK, despite economic pressure and political instability in many markets -- the firm revealed total sales up 2% compared with the first quarter of last year. GSK also reported first-quarter net profits of 1.39 billion pounds -- slightly lower than the same period in 2011 (1.52 billion pounds) -- and the board declared a 6% increase in the Q1 dividend to 17 pence per share.
Then in July, GSK announced that overall group sales declined 2% in the second quarter and were flat for the first six months of the year. The performance was because of worsening economic conditions in Europe and the U.S., and the adverse impact to pricing on the group's established products. However, the company confirmed another 6% increase to the Q2 dividend to 17 pence per share.
With Q3 results due on Oct. 31, sales this year are expected to be in line with 2011 on a constant-currency basis. In the half-year report, Sir Andrew Witty said:
Whilst we are under no illusions that we must respond to the challenging economic environment we face, the very significant progress made in our late-stage pipeline provides us with increasing confidence that we have the ability to deliver long-term sustainable sales growth and improving returns to shareholders.
For the remainder of this year we will continue to look to maximise growth opportunities from key investment areas and take further action to reduce our cost base and implement financial efficiencies. At the same time, and going into 2013, we will focus on preparation for the roll out of multiple new products, which we would expect to see materially contribute to the Group sales and earnings over the next few years.
No doubt some GSK's investors will be hoping for faster share-price progress next year. For the moment, though, the share continues to look more like one for dividend seekers.
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