On February 8, 2017, GlaxoSmithKline (GSK) reported its 4Q16 earnings. Its revenue rose 21.0% to 7.6 billion pounds, and EPS (earnings per share) was 26 pence. The company met Wall Street analysts’ 4Q16 estimates for revenue and EPS.
For 2016, the company reported a rise in revenue of 17.0% to 27.9 billion pounds.
The above graph shows the revenue trend for GSK over the last few quarters. There are various factors affecting those revenues, which we’ll look at in the rest of this series.
GlaxoSmithKline’s top line rose 21.0% to ~7.6 billion pounds for 4Q16. It was driven by an operational rise of 3.0% and a favorable currency impact of 18.0%. The rise was also driven by new pharmaceutical and vaccine products that GSK added to its portfolio. The positive impact of foreign exchange was due to the weakening of the sterling against all major currencies for developed countries.
Geographically, US markets contributed nearly 38.2% of the company’s total revenues at 2.9 billion pounds for 4Q16. That was a rise of 10.0% at constant exchange rates compared to 4Q15. European markets contributed nearly 25.8% to total revenue at 2.0 billion pounds for 4Q16, a rise of 3.0% at constant exchange rates compared to 4Q15.
The contribution from international markets was nearly 36.0% of total revenues at 2.7 billion pounds for 4Q16, a 4.0% fall compared to 4Q15. The rise in revenues across all geographical areas is due to the strong performance of new pharmaceutical products, including HIV (human immunodeficiency virus) and vaccine products.
In order to divest the risk, you can consider ETFs such as the Vanguard Total International Stock ETF (VXUS), which holds ~0.50% of its investments in GlaxoSmithKline (GSK), 1.1% in Novartis (NVS), 0.50% in Sanofi (SNY), and 0.40% in AstraZeneca (AZN).