Gsk Plc · LSE:GSK
Gsk — FY2017 Earnings Presentation
31 slides from Gsk's earnings presentation, Feb 7, 2018
Slide 1: 2017 Full Year Results
2017 Full Year Results 7 February 2018
Slide 2: Cautionary statement regarding forward-looking statements
Cautionary statement regarding forward-looking statements This presentation may contain forward-looking statements. Forward-looking statements give the Group’s current expectations or forecasts of future events. An investor can identify these statements by the fact that they do not relate strictly t
Slide 3: Agenda
Agenda 2017 progress Emma Walmsley, Chief Executive Officer Commercial priorities: Luke Miels, Respiratory and Vaccines President, Global Pharmaceuticals 2017 results and 2018 guidance Simon Dingemans, Chief Financial Officer 2018 priorities and outlook Emma Walmsley, Chief Executive Officer Q&A: Da
Slide 4: Emma Walmsley, CEO
Emma Walmsley, CEO 7 February 2018
Slide 5: Balanced business to deliver growth and returns to shareholders
Balanced business to deliver growth and returns to shareholders Common goal to improve health, from prevention to treatment Pharmaceuticals Vaccines Consumer Healthcare Therapeutic and category leadership Leading positions in Broadest portfolio Category leadership HIV and Respiratory with leading po
Slide 6: Sales growth in all businesses; improved Group margin and cashflow generation
Sales growth in all 3 businesses; improved Group margin and cashflow generation Pharmaceuticals Group sales growth +3% CER New Respiratory products +75% of +3% HIV sales +16% 0.4pp improvement in Group Adjusted Vaccines operating margin +6% CER Meningitis sales +27% Influenza vaccines +12% Adjusted
Slide 7: Good progress on our long term strategic priorities
Good progress on our 3 long term strategic priorities Innovation Performance Trust Executing on three major Re-allocation of resources Strengthen quality of new launches to key priorities medical engagement Advancing our pipeline Fuelled by cost, cash Focused global health Improved and capital disci
Slide 8: Building a winning team
Building a winning team 3 new executive team members ~40% of Executive Team -1 (top 125) roles transitioned Focus on top talent for ~370 critical roles Internal promotions and Dr Hal Barron Luke Miels Karenann Terrell new hires including from: Chief Scientific Officer President, Global Chief Digital
Slide 9: Commercial priorities: Respiratory and Vaccines
Commercial priorities: Respiratory and Vaccines Luke Miels, President, Global Pharmaceuticals
Slide 10: Priorities and focus drive success
Priorities and focus drive success Capital allocation Clear priorities for 3 new blockbusters1 focused on 3 must-wins commercial organisation Relvar/Breo Tivicay Triumeq US$m 1) Product Maximise 3,000 Trelegy, Shingrix, Nucala Respiratory portfolio 2) Geographies Deliver GSK’s best ever 2,000 Top te
Slide 11: Shingrix: a new standard of prevention in Shingles
Shingrix: a new standard of prevention in Shingles >100m US adults recommended Building a blockbuster for vaccination1 Strong clinical profile Expanded age >90% efficacy across identified age groups2,3 recommendation (50-59) ~42m Sustained efficacy3 Landmark ACIP preferential recommendation Age 60+
Slide 12: Nucala: leading respiratory biologic with significant growth opportunity
Nucala: leading respiratory biologic with significant growth opportunity Highly competitive profile Significant growth opportunity Exacerbation frequency by baseline blood eosinophil count at Week 321 Undertreated patient population Rate of in asthma exacerbations/year 2.5 2 Potential in other eosin
Slide 13: Trelegy: driving continued leadership
Trelegy: driving continued leadership Significant exacerbation reduction Demonstrated superiority in COPD with TRELEGY in COPD Trelegy Relvar/Breo1 Anoro1 Symbicort2 15% 25% 35% reduction reduction reduction vs vs Breo6 vs Anoro6 Symbicort7 Incruse Spiriva3 Anoro Stiolto4 Usual care in COPD5 IMPACT
Slide 14: 2017 results and 2018 guidance
2017 results and 2018 guidance Simon Dingemans, CFO
Slide 15: Headline results
Headline results Sales growth, operating leverage and rebuilding cash flows FY 2017 Reported growth % £m AER CER Turnover 30,186 8 3 Total operating profit 4,087 57 39 Total EPS 31.4 67 36 Adjusted operating profit 8,568 12 5 Adjusted EPS 111.8 11 4 Free cash flow 3,437 14 n/a 15
Slide 16: Results reconciliation
Results reconciliation 2017 full year results Disposals, Total Intangible Intangible Major Transaction significant US Tax Adjusted results amortisation impairment restructuring related legal and other reform results Turnover 30.2 30.2 (£bn) Operating 4.1 0.6 0.7 1.1 1.6 (0.1) 0.7 8.6 profit (£bn)* E
Slide 17: Sales growth
Sales growth Growth in all three businesses 2016 sales at 2016 rates £27.9bn 27.5% Pharma up 3% CER £0.5bn Vaccines up 6% CER £0.3bn Consumer up 2% CER £0.2bn CER +3% £28.8bn FX +5% £1.4bn AER +8% £30.2bn Sales numbers on this slide do not add to the total because they have been rounded to the neare
Slide 18: Adjusted operating margin
Adjusted operating margin Continued margin progression 2020 outlook* Sales up 3% CER 2017 unchanged at actual rates at 2015 rates 2016 operating margin 27.5% 34.3% COGS up 1% CER 0.5% (-60 bps Low 30s Pharma SG&A up 1% CER 0.5% CER) +0.4% improvement R&D up 8% CER 0.5% 31.9% at CER -0.1% Vaccines (+
Slide 19: Cost discipline to fuel investment for growth
Cost discipline to fuel investment for growth Funding new product launches, R&D pipeline and protecting margins Investment in New product sales new products Investment in Supply chain efficiency R&D pipeline Operating margin % Seretide / Advair Tighter SG&A control Broader pricing pressure £4bn cost
Slide 20: Operating profit to net income
Operating profit to net income Expect benefit from US tax reform 2016* 2017 Adjusted results £m £m 2018 Outlook** Operating profit 7,671 8,568 Net finance expense (652) (657) Broadly similar Share of associates 5 13 Tax (1,498) (1,667) 19-20% after US tax reform Tax rate 21.3% 21.0% Minorities (637)
Slide 21: Improved cash generation
Improved cash generation Stronger operating performance, lower restructuring and Capex £m 2016 free cash flow 3,014 Higher net operating cash* 100 Lower restructuring payments 522 Higher minorities and CCL 478 Lower net Capex** 150 Other*** 129 2017 free cash flow 3,437 368 in H1, 3,069 in H2 * Net
Slide 22: 2018 guidance and 2020 outlook expectations
2018 guidance and 2020 outlook expectations 2020 outlook* 2018 US Advair scenarios unchanged Assuming no Adjusted Group sales substitutable generic, EPS CAGR expect US Advair sales Up 4 to 7% Low-to-mid down 20-25% CER CER single digit % Assuming July Adjusted Adjusted substitutable generic, EPS EPS
Slide 23: 2018 priorities and outlook
2018 priorities and outlook Emma Walmsley, CEO
Slide 24: 2018 priorities
2018 priorities Ellipta portfolio and Nucala Innovation Commercial Shingrix launch execution HIV leadership New leadership Strengthen Development discipline Performance R&D Targeted investment Cost, cash Focus on capital allocation and capital Commercial and supply chain restructuring Trust discipli
Slide 25: Capital allocation framework
Capital allocation framework Key priorities for capital Invest 1. Pharma pipeline including BD Innovation in the 2. Consumer put business 3. Vaccines capacity Improved 80p per share expected for 2018 Performance cash Shareholder Focus on rebuilding free cash flow cover over time generation returns T
Slide 26: Increased confidence in 2020 outlook
Increased confidence in 2020 outlook Innovation Group sales 5 year CAGR low to mid single digit* Performance Adjusted EPS mid to high single digit* 5 year CAGR Trust 26 *All 2020 outlook statements are at constant, 2015 exchange rates. The CAGRs are 5 years to 2020, using 2015 as the base year.
Slide 27: Q&A
Q&A
Slide 28: Appendix
Appendix
Slide 29: Data on key assets in next 3 years to inform investment in Pharma pipeline
Data on key assets in next 3 years to inform investment in Pharma pipeline, organically or inorganically 2018 2019 2020 Closed triple 2894512 (tapinarof) Closed triple Regulatory Asthma topical NSAID in atopic dermatitis, psoriasis Asthma US/EU submissions US/EU submissions US/EU approvals cabotegra
Slide 30: Good progress on restructuring
Good progress on restructuring Programme mostly completed, so lower incremental annual savings going forward Annual savings at 2015 FX £bn Costs of up to £5.7bn £4.1bn cash £1.6bn non cash 4.0 3.7 3.3 3.5 £4.8bn expensed to date (up to Q4 2017) 2.8 £3.5bn cash, £3.1bn paid £1.3bn non cash 2016 2017
Slide 31: Currency
Currency 2017 currency sales exposure 2018 Adjusted EPS ready reckoner US $ 37 % US $ 10 cents movement in average exchange rate for full year Euro € 19 % impacts EPS by approx. +/- 4.0% Japanese ¥ 7% Other* 37 % Euro € 10 cents movement in average exchange rate for full year impacts EPS by approx.