GlaxoSmithKline Q4 and full-year profits rise as restructuring pays off

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The GlaxoSmithKline offices in London, Wednesday, April 28, 2010. THE CANADIAN PRESS/AP, Kirsty Wigglesworth

LONDON - Restructuring and reduced overheads helped GlaxoSmithKline PLC return to profit in the fourth quarter, with the UK drug maker adding that the U.K. drug maker was optimistic about new product development this year.

For the three months ending Dec. 31, GSK on Tuesday reported a worse-than-expected net profit of 1.25 billion pounds (US$1.98 billion) compared with a loss of 633 million pounds a year earlier.

Revenue also fell short of analyst forecasts, down 3 per cent at 6.98 billion pounds.

For the full year, net profit more than trebled, from 1.63 billion pounds in 2010 to 5.26 billion pounds last year. Revenue was down 3.5 per cent to 27.4 billion pounds.

Sales and administration costs were slashed by a third to 8.8 billion pounds. Restructuring costs of 150 million pounds were roughly half the previous year's figures.

The company said it planned to extend its share repurchase program by 1 billion pounds to 2 billion pounds, after spending 2.2 billion pounds on buybacks last year.

GSK shares were down 1.8 per cent at 1,394 pence following the report's release.

Keith Bowman, analyst at Hargreaves Lansdown Stockbrokers, said the fourth-quarter results were at the lower end of expectations.

"Pricing pressure has been seen across a number of the group's markets, while the company's R&D efforts are yet to yield what the group itself sees as an acceptable return," Bowman said.

Chief Executive Andrew Witty said 2011 sales were up 4 per cent excluding the exceptional bulge in vaccine sales a year earlier. He was optimistic about the development of new products this year.

"I am pleased to confirm that of the 15 late-stage drugs and vaccines we highlighted last year, we have received some or all of the data on nine of them," Witty said.

"Most importantly, one has already filed and we have three more ready to file. In addition, our quadrivalent flu vaccine, which was not included in the 15, has progressed very quickly and will also file very shortly."