Glaxo Swings to Loss on Write-Down But Core Earnings, Revenue Beat Expectations -- Update

By Denise Roland 

GlaxoSmithKline PLC posted a loss in the second quarter, reflecting a GBP1.8 billion ($2.36 billion) write-down related to the increased value of liabilities following the sharp drop in the value of the pound triggered by Britain's vote to leave the European Union.

At the same time, the company cheered investors by beating market expectations for core earnings and revenue, sending shares up 1.5%. Glaxo also narrowed its full-year guidance to the upper end of earlier estimates. It now expects core earnings per share to increase 11-12% in 2016, compared with 10-12% previously.

Core operating profit, a measure that strips out one-time losses and gains, increased 36% to GBP1.8 billion, as revenue climbed 11% to GBP6.5 billion, beating analyst forecasts of GBP6.3 billion.

Glaxo reports in pounds but makes most of its revenue outside the U.K., meaning its reported revenue benefited from the sharp drop in the value of the pound following the Brexit vote, a currency move that also increased the value of Glaxo's liabilities. Adjusting for currency, core operating profit climbed 15% and revenue rose 4%.

The pharmaceutical giant posted a net loss of GBP435 million for the three months to June 30, compared with GBP149 million net profit reported a year earlier.

Write to Denise Roland at [e-mail]

(END) Dow Jones Newswires

July 27, 2016 08:32 ET (12:32 GMT)

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