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GlaxoSmithKline keeps guidance but wary over vaccination recovery

There was a sharp drop off in the second quarter as disruption from COVID-19 began to be felt

GlaxoSmithKline PLC -

GlaxoSmithKline PLC (LON:GSK), the pharma major, said it is keeping its forecasts for the current year unchanged for now but this might change if vaccination rates don’t recover.

The FTSE100 group said this morning that the UK government has ordered £500mln worth of a coronavirus vaccine it is developing jointly with French group Sanofi.

In the first half of 2020, however, the pandemic hit the number of other vaccinations carried out by the group, which meant underlying earnings dropped by 37% to 19.2p.

Revenues for the six months to June rose by 8% to £16.7bn, but there was a sharp drop off in the second quarter as disruption from COVID-19 began to be felt and revenues fell 3% to £7.62bn.

Statutory half-year profits rose by 74% to £4.45bn, which reflected gains on completion of the sales of consumer brands including Horlicks, though the second quarter saw a 21% dip to £1.75bn.

Emma Walmsley, chief executive, said:  "As expected, our performance this [second] quarter was disrupted by COVID-19, particularly in our Vaccines business, as visits to healthcare professionals were limited due to lockdown measures.”

How vaccine visits recover will affect the second half, Glaxo added.  

Currently, it expects underlying earnings for the 2020 year to decline in a range of between 1-4%, but it added there are notable risks to this guidance.

" In particular, the outcome is dependent on the timing of a recovery in vaccination rates, particularly in the US, which we anticipate in the third quarter. 

“If we were to experience a delay in this recovery we could see a significant impact in 2020.  In the case of, for example, a three-month delay, the impact on adjusted EPS would be up to 5 percentage points.”

A dividend of 19p was declared for the second quarter.

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Price: 1611.6 GBX

Market: LSE
Market Cap: £80.86 billion


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