GlaxoSmithKline plc (NYSE:GSK) Q3 2018 Earnings Conference Call - Final Transcript

Oct 31, 2018 • 10:30 am ET


GlaxoSmithKline plc (NYSE:GSK) Q3 2018 Earnings Conference Call - Final Transcript


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Good afternoon, ladies and gentlemen, and welcome to the GSK Quarter Three 2018 Results Call. I will now hand you over to Sarah Elton-Farr, Head of Investor Relations, who will introduce today's session. Please proceed.

Sarah Elton-Farr

Good morning and good afternoon, everyone. Thank you for joining us to discuss our Q3 2018 results, which were issued earlier today. You should have received our press release and can view the presentation on GSK's website. For those not able to view the webcast, slides that accompanies today's call are located on the Investors section of our website.

Before we begin, please refer to slide two of our presentation for our cautionary statements. Our speakers today are Chief Executive Officer, Emma Walmsley; Luke Miels, President of Global Pharmaceuticals; David Redfern, Chief Strategy Officer and Chairman of ViiV; and Simon Dingemans, Chief Financial Officer.

Following our presentation, we will open the call to questions and answers. We request that you ask only a maximum of two questions so that everyone has a chance to participate. Joining us for Q&A are Dr. Hal Barron, Chief Scientific Officer and President of R&D; and Brian McNamara, CEO of our Consumer Healthcare business.

Emma Walmsley

So overall, Q3 was another good quarter of progress for GSK, with improvements in sales, the group operating margin, earnings per share and cash flow. Group sales growth of 6% in CER terms reflected sales growth in all three of our global businesses. Our Pharma business grew at 3% CER during the quarter, driven by HIV and growth of new respiratory products. Our new respiratory portfolio grew at 40% CER including a GBP 42 million contribution from Trelegy, which continues to see good traction.

In HIV, we also continued to delivered double-digit growth, driven by sales of our dolutegravir portfolio including Juluca, the first of our new two drug regimens. Benlysta has also become a contributor to growth and grew at 31% CER. Vaccine sales were up 17% CER with continued strong demand for Shingrix, and for which sales are now expected to be GBP 700 million to GBP 750 million for the full year as well as growth of the meningitis vaccine, Bexsero.

And in Consumer Healthcare, we delivered 3% growth with growth in wellness, oral health and nutrition. We're making very good progress on margin improvements within our Consumer Healthcare business. And this quarter, operating margins reached 22%, an increase of 250 basis points in CER terms compared to this quarter last year, reflecting continued manufacturing restructuring and integration benefits and improved product mix as well as strong cost control.

Group operating margins this quarter were up 20 basis points on a CER basis, reflecting a more favorable mix of business and continued tight control of ongoing costs, which offset the investments we are making in the business.

Adjusted earnings were up 14% CER, ahead of operating profit growth, primarily as a result of lower minority charges due to our acquisition of the Novartis stake in consumer health JV as well as a reduced adjusted