GSK advances on plans to sell Lucozade and Ribena brands, Q1 results disappoint

FTSE 100-listed pharmaceuticals group GlaxoSmithKline (GSK) has announced plans to sell its Lucozade and Ribena brands during its less-than-impressive first quarter results, which showed a two per cent contraction in group sales.

Some analysts have suggested that the decision to sell the brands could earn the company in the region of £1.0bn.

GSK said that the results reflected the ongoing contribution from 'key growth drivers', which were offset by anticipated 'demanding' prior year comparisons.

Pre-tax profit for the period declined from £1.86bn to £1.41bn year-on-year.

Excluding the divestments primarily of Vesicare and non-core OTC brands, sales rose 2.0% during the period.

Pharmaceuticals and Vaccines sales fell 2.0%, while Consumer Healthcare rose 1.0%.

The group reported an adjusted net cash inflow from operating activities of £1.4bn, up from £1.1bn in the first quarter of 2012.

The group reported that during the period it had delivered core earnings per share of 26.9p and a dividend of 18p.

Sir Andrew Witty, Chief Executive Officer of GlaxoSmithKline, said: "This quarter marks continued strategic delivery for GSK with sales and earnings in line with our expectations, significant pipeline progress and further growth in our returns to shareholders through a 6.0% increase in the dividend."

He said that the group is implementing a "major new change programme" designed to improve the competitiveness of its European Pharmaceuticals business and also restructure its manufacturing and research and development businesses to simplify its operating model and release resources.

"The initial phases of these programmes are progressing well and remain on track to deliver total annual savings of at least £1.0bn by 2016. In the short term, the benefits of our restructuring programmes are not only helping to offset some of the margin pressure we are seeing due to the changing shape of our business but also are supporting the investment behind our continuing preparations for the launch of the pipeline," he said.

GlaxoSmithKline's share price was up 0.57% to 1,688p at 12:58 on Wednesday.

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