Gsk Plc · LSE:GSK
Gsk — H1 2012 Earnings Presentation
26 slides from Gsk's earnings presentation, Jul 25, 2012
Slide 1: H1 Results 2012
sid H1 Results 2012 25 July 2012
Slide 2: Andrew Witty, Simon Dingemans
Andrew Witty Chief Executive Officer Simon Dingemans Chief Financial Officer
Slide 3: Continued execution of our strategy in a difficult external environment
Continued execution of our strategy in a difficult external environment Grow Businesses in innovation markets structured to launch new products a diversified global business Reshaped R&D delivers sustainable pipeline flow Deliver Increased portfolio of affordable Pharma, Vaccines more products and C
Slide 4: Sales growth from investment businesses outweighed by pressures in mature markets and from divestments
Sales growth from investment businesses outweighed by pressures in mature markets and from divestments Movements are in £m on a constant exchange rate basis
Slide 5: European volume performance in line with peers
European volume performance in line with peers GSK growth excludes Avandia Source: IMS Health data (number of packs); Peers represent: Abbott AstraZeneca Bayer GSK Johnson & Johnson Lilly Merck & Co Novartis Pfizer Roche Sanofi
Slide 6: US business portfolio transition
US business portfolio transition Q2 12 sales analysis: £1.7bn down 6% Graph shows Q2 contribution to growth at CER
Slide 7: GSK at the half year
GSK at the half year Tough macro environment Broadly flat Continued focus on Increasing cash sales costs & margins generation & returns • Growth in EMAP • Direct further action on to shareholders Japan & ongoing cost base • £3.2bn distributed to Consumer • Acceleration of shareholders • Europe/US de
Slide 8: Data in-house for 12 of the key 15 pipeline assets; 10 are positive
Data in-house for 12 of the key 15 pipeline assets; 10 are positive Q2 2011 FY 2011 H1 2012 Status UMEC/VI (LAMA/LABA) Respiratory Relvar/Breo (LABA/ICS) Tykerb (adj breast cancer) Votrient Oncology Promacta/Revolade trametinib (MEK inhibitor) dabrafenib (BRAF inhibitor) MAGE-A3 (therapeutic vaccine
Slide 9: Data in-house for 12 of the key 15 pipeline assets; 10 are positive
Data in-house for 12 of the key 15 pipeline assets; 10 are positive Q2 2011 FY 2011 H1 2012 Status UMEC/VI (LAMA/LABA) Respiratory Relvar/Breo (LABA/ICS) Tykerb (adj breast cancer) Votrient Oncology Promacta/Revolade trametinib (MEK inhibitor) dabrafenib (BRAF inhibitor) MAGE-A3 (therapeutic vaccine
Slide 10: Data in-house for 12 of the key 15 pipeline assets; 10 are positive
Data in-house for 12 of the key 15 pipeline assets; 10 are positive Q2 2011 FY 2011 H1 2012 Status UMEC/VI (LAMA/LABA) Filing 20121 Respiratory Relvar/Breo (LABA/ICS) Filed Tykerb (adj breast cancer) Votrient Approved2 Oncology Promacta/Revolade Filed trametinib (MEK inhibitor) Filing Q3’12 dabrafen
Slide 11: Pipeline delivery builds on existing areas of strength
Pipeline delivery builds on existing areas of strength Respiratory Vaccines CV/Urology/ Metabolic • £3.7bn (+1%) in H1 • £1.5bn (flat) in H1 • CV & Urology £1.3bn (+10%) • Relvar/Breo filed • 2 meningitis vaccines approved in H1 • albiglutide data in house and • Positive UMEC/VI pivotal data • Quadr
Slide 12: Strategy has delivered £22bn of cash to shareholders; further actions to enhance future returns
Strategy has delivered £22bn of cash to shareholders; further actions to enhance future returns 2008 to H1 2012 2012 onwards £22bn returned to shareholders Continuing commitment to grow through dividends and dividend and sustain long term share buybacks share buybacks Driven by…. Driven by…. • Geogr
Slide 13: Simon Dingemans
Simon Dingemans Chief Financial Officer
Slide 14: Strategy to deliver sustainable financial performance and returns to shareholders
Strategy to deliver sustainable financial performance and returns to shareholders Sales growth Operating leverage Returns to shareholders Financial efficiency Cash flow growth
Slide 15: Headline results
Headline results Growth % Growth% £m Q2 2012 CER £ H1 2012 CER £ Turnover 6,462 (2) (4) 13,102 - (2) Core Operating profit 2,002 (7) (8) 4,073 (2) (3) Core EPS 26.4p (5) (5) 53.7p 1 - Adjusted FCF 1,315 39 2,062 4 (FCF excl. legal)
Slide 16: Sales growth from investment businesses outweighed by pressures in mature markets and from divestments
Sales growth from investment businesses outweighed by pressures in mature markets and from divestments Movements are in £m on a constant exchange rate basis
Slide 17: Q2 2012 core operating margin impacted by COGS comparator
Q2 2012 core operating margin impacted by COGS comparator Sales growth Q2 12 Q2 11 Margin Margin Operating leverage Financial efficiency Cash flow growth
Slide 18: Q2 2012 core operating margin impacted by COGS comparator
Q2 2012 core operating margin impacted by COGS comparator Sales growth Q2 12 Q2 11 Margin Margin 26.2% 24.2% Operating leverage Financial efficiency Cash flow growth
Slide 19: Q2 2012 core operating margin impacted by COGS comparator
Q2 2012 core operating margin impacted by COGS comparator Sales growth Q2 12 Q2 11 Margin Margin 26.2% 24.2% Operating leverage 30.3% 31.0% Financial efficiency Cash flow growth
Slide 20: Q2 2012 core operating margin impacted by COGS comparator
Q2 2012 core operating margin impacted by COGS comparator Sales growth Q2 12 Q2 11 Margin Margin 26.2% 24.2% Operating leverage 30.3% 31.0% 13.6% 13.5% Financial efficiency 1.1% 0.9% Cash flow growth
Slide 21: Continue to make progress on delivery of financial efficiencies
Continue to make progress on delivery of financial efficiencies Operating Profit Sales growth Status Future Q2 effective interest rate Target ~6% by 2013 ~7.5% following re-financing Operating Net debt to increase leverage Net debt £9.6bn at H1 Continue to target A-1/P-1 short-term rating Core incom
Slide 22: Generated £2.1bn free cash flow (ex legal) in H1 12
Generated £2.1bn free cash flow (ex legal) in H1 12 Sales growth Operating leverage Financial efficiency Cash flow growth H1 adjusted net cash flow from operating activities £3.1bn
Slide 23: Continued progress in reducing working capital
Continued progress in reducing working capital Sales growth Conversion cycle Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 DSO 64 63 61 62 60 Operating DPO 34 33 43 40 41 leverage DIO 206 197 192 193 193 Days 236 227 210 215 212 Financial efficiency Working capital as % of sales Cash flow growth Q2 11 Q3 11 Q4 11 Q
Slide 24: Liquidity in anticipation of legal and acquisition costs
Liquidity in anticipation of legal and acquisition costs Sales growth Operating leverage Financial efficiency Cash flow growth
Slide 25: £3.2bn cash returned to shareholders in H1 2012
£3.2bn cash returned to shareholders in H1 2012; up 22% compared with H1 2011 Dividends Buyback £2.1bn* in H1 2012 £1.1bn in H1 2012 Q1 +6% Q2 +6% * Comprises payment of 2011 third interim dividend (£847m), and 2011 fourth interim dividend (£1,043m) and the 2011 Supplemental dividend (£248m)
Slide 26: GSK is positioned for continued returns to shareholders
GSK is positioned for continued returns to shareholders Sales growth Operating leverage Returns to shareholders Financial efficiency Cash flow growth