GSK beats expectations but Shingrix and Arexvy miss weighs on Vaccines

GSK PLC on Wednesday reported better-than-expected earnings, largely driven by improved margins and lower costs, although sales growth was limited by a weaker-than-hoped performance in its Vaccines division.

The London-based pharmaceuticals company said pretax profit fell 21% to £1.94 billion in the quarter ended September 30 from £2.46 billion a year earlier.

Revenue increased 4.0% to £8.89 billion from £8.55 billion, 0.6% ahead of £8.84 billion company-compiled consensus.

Operating profit fell 18% to £2.13 billion from £2.59 billion, reflecting restructuring charges of £328 million and lower other net operating income.

But core operating profit rose 3.0% to £3.08 billion from £2.99 billion, beating the £2.93 billion market consensus by 5.1%.

Core earnings per share eased 0.7% to 54.6 pence from 55.0p a year ago, but were 8.3% ahead of 50.4p consensus.

The proportionally larger earnings beat versus sales reflected a higher gross margin, higher royalty income and lower selling, general & administrative expenses, JPMorgan analysts said.

Core operating margin of 34.6% was down from 34.9% a year ago but was ahead of 33.1% consensus.

Royalty income rose to £258 million from £208 million, beating £224 million consensus. SG&A expenses were little changed at £2.16 billion on-year, ahead of £2.25 billion consensus.

Despite the earnings beat, shares in GSK were down 4.7% at 1,834.00p each in London on Wednesday morning.

Sales growth was supported by strong Specialty Medicines sales, which increased 15% at constant exchange rates to £3.88 billion from £3.41 billion on-year, beating £3.85 billion consensus. Here, HIV sales rose 10%, Respiratory, Immunology & Inflammation sales grew 21% and Oncology sales increased 23%.

But Vaccines sales fell 2.0% at constant currency to £2.58 billion from £2.68 billion, missing £2.62 billion consensus. Here, Shingrix sales fell 5%, and missed consensus by 8%, and Arexvy sales slumped 24%, coming in 16% below consensus.

General Medicine sales of £2.43 billion were flat on-year and above £2.37 billion market consensus.

Chief Executive Officer Luke Miels said: "GSK has delivered another strong quarter, with our key growth drivers and new launches performing well. We remain focused on operational delivery, execution and accelerating R&D."

Looking ahead, GSK maintained its full-year guidance for revenue growth of 3.0% to 5.0% and core operating profit and earnings per share growth of 7.0% to 9.0%, all at constant exchange rates. It expects revenue and core operating profit growth towards the upper half of their respective ranges, but core EPS growth towards the lower half.

In 2025, GSK reported revenue of £32.67 billion, core operating profit of £9.78 billion and core EPS of 172.0p.

GSK declared a third-quarter dividend of 17p per share and continues to expect a full-year payout of 70p, which would be up 6.1% from 66p in 2025.

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