GSK - 1st Quarter Results

[idpickering]

GSK makes a strong start to 2024 with improving outlook for the year

Broad-based performance drives sales, profits and earnings growth:

Total Q1 2024 sales £7.4 billion +10% and +13% ex COVID

Vaccines sales +16%, +22% ex COVID. Shingrix £0.9 billion +18%, Arexvy £0.2 billion

Specialty Medicines sales +17%, +19% ex COVID with HIV +14%

General Medicines sales +1%. Trelegy £0.6 billion +33%

Total operating profit and Total EPS for Q1 2024 reflected higher charges for CCL(2) remeasurement, partly offset by strong Core(1) growth

Core operating profit +27% (with further positive impact of +8% ex COVID) and Core EPS +28% (with further positive impact of +9% ex COVID). This reflected strong sales and SG&A leverage, partly offset by increased investment in R&D and lower royalty income

Cash generated from operations exceeded £1 billion with free cash flow of £0.3 billion

(Financial Performance - Q1 2024 results unless otherwise stated, growth % and commentary at CER, ex COVID is excluding COVID-19 solutions as defined on page 47).

And later;

Quarterly dividends

The Board has declared a first interim dividend for Q1 2024 of 15p per share (Q1 2023: 14p per share).

Dividends remain an essential component of total shareholder return and GSK recognises the importance of dividends to shareholders. On 23 June 2021, at the GSK Investor Update, GSK set out that from 2022 a progressive dividend policy will be implemented guided by a 40 to 60 percent pay-out ratio through the investment cycle. Consistent with this, GSK has declared a dividend of 15p for Q1 2024 and expects to declare a dividend of 60p per share for full year 2024. In setting its dividend policy, GSK considers the capital allocation priorities of the Group and its investment strategy for growth alongside the sustainability of the dividend.

Payment of dividends

The equivalent interim dividend receivable by ADR holders will be calculated based on the exchange rate on 9 July 2024. An annual fee of $0.03 per ADS (or $0.0075 per ADS per quarter) is charged by the Depositary. The ex-dividend date will be 16 May 2024, with a record date of 17 May 2024 and a payment date of 11 July 2024.

https://www.investegate.co.uk/announcem ... ts/8165812

Also posted on Company News here; viewtopic.php?p=662229#p662229

I hold these in my HYP, and know others here do too, so this may be of interest here.

Ian.

[88V8]

We have quite a large legacy holding from my wife's employment there, although it has been whittled down.
The divi is well covered, but at c3% yield they wouldn't make the cut today.

V8

[idpickering]

We have quite a large legacy holding from my wife's employment there, although it has been whittled down.
The divi is well covered, but at c3% yield they wouldn't make the cut today.

V8

Thanks for your input. I get where you're coming from regarding the lowish yield on offer from holding GSK currently, but such things don't bother me to much. It's better than chasing what might be overly high yields elsewhere. I think there's a safety aspect to HYPing too, that shouldn't be ignored. I also hold BAE Systems, AstraZeneca and Unilever too, all of which aren't 'high' yielders. All are very useful for providing my HYP some balance and diversification too, all IMHO of course.

Ian.

[tjh290633]

We have quite a large legacy holding from my wife's employment there, although it has been whittled down.
The divi is well covered, but at c3% yield they wouldn't make the cut today.

V8

Agreed, but the trick is to buy when the yield is attractive. It was 5.34% when I bought in 2010 at 1254p. I don't contemplate a disposal unless the yield falls below half the market yield, and not necessarily then.

TJH

[moorfield]

We have quite a large legacy holding from my wife's employment there, although it has been whittled down.
The divi is well covered, but at c3% yield they wouldn't make the cut today.

V8

Agreed, but the trick is to buy when the yield is attractive. It was 5.34% when I bought in 2010 at 1254p. I don't contemplate a disposal unless the yield falls below half the market yield, and not necessarily then.

This is a good example of what I was getting at on the other thread last week. HYPsters not thinking through the bigger income picture.

Provided that overall portfolio yield remains "high", GSK (and AZN too for that matter), then why shouldn't it make the cut today ?

[kempiejon]

Provided that overall portfolio yield remains "high", GSK (and AZN too for that matter), then why shouldn't it make the cut today ?

When bought the yield should be above the ftse100 yield. My version, I prefer above current portfolio yield. It doesn't matter what the yield does after purchase. The shares are held forever so expect yields to change but don't we all know this? GSK 7 years static then a reduction of a third in 2022. Not suitable for years if you ask me. AZN very poor growth of long term income. 280¢ 2011-2020, 290¢ last year. Even if high yielding that's a piggling increase I might have an opinion on.

[tjh290633]

Agreed, but the trick is to buy when the yield is attractive. It was 5.34% when I bought in 2010 at 1254p. I don't contemplate a disposal unless the yield falls below half the market yield, and not necessarily then.

This is a good example of what I was getting at on the other thread last week. HYPsters not thinking through the bigger income picture.

Provided that overall portfolio yield remains "high", GSK (and AZN too for that matter), then why shouldn't it make the cut today ?

Because if you are buying a new holding, or topping up an existing holding, there are better shares on offer.

TJH

[moorfield]

When bought the yield should be above the ftse100 yield.

Quite so, and I'm suggesting that's a myopic outlook. If you subscribe to the idea that a share held today is the same as a share bought today (or put differently what GSK has paid in the past has been spent, it's what it pays next year that matters) - then it is seemingly absurd that TJH both holds GSK and agrees that it wouldn't "cut it" in a new portfolio. That problem resolves itself easily by considering overall yield.

It's an interesting exercise to compute overall yield of 15 FTSE100 shares and the effect of swapping in and out higher or lower yielders. The dial usually does not change through much of a range, even less so the larger a portfolio becomes. I suspect few folk do.

[kempiejon]

When bought the yield should be above the ftse100 yield.

Quite so, and I'm suggesting that's a myopic outlook. If you subscribe to the idea that a share held today is the same as a share bought today (or put differently what GSK has paid in the past is irrelevant, it's what it pays next year that matters) - then it is seemingly absurd that TJH both holds GSK and agrees that it wouldn't "cut it" in a new portfolio. That problem resolves itself easily by considering overall yield.

It's an interesting exercise to compute overall yield of 15 FTSE100 shares and the effect of swapping in and out higher or lower yielders. The dial usually does not change through much of a range, even less so the larger a portfolio becomes. I suspect few folk do.

What GSK pays next year will be less than it paid in 2020.
I have a section in my spreadsheet which I use to look at the impact of swapping the lower yielders for the portfolio average. But HYP isn't a trading strategy.
A share that today is a low yielder wouldn't be selected for purchase. A share that is held, the yield is irrelevant, it's a function we care about when buying, but from then on who cares?

[tjh290633]

When bought the yield should be above the ftse100 yield.

Quite so, and I'm suggesting that's a myopic outlook. If you subscribe to the idea that a share held today is the same as a share bought today (or put differently what GSK has paid in the past has been spent, it's what it pays next year that matters) - then it is seemingly absurd that TJH both holds GSK and agrees that it wouldn't "cut it" in a new portfolio. That problem resolves itself easily by considering overall yield.

It's an interesting exercise to compute overall yield of 15 FTSE100 shares and the effect of swapping in and out higher or lower yielders. The dial usually does not change through much of a range, even less so the larger a portfolio becomes. I suspect few folk do.

I'm glad that you said that. Here is a list of my portfolio, ranked by yield:

Rank   EPIC     Yield    Net      % Median   Cum Mean
   1   VOD      11.42%   11.42%    256.57%     11.42%
   2   BATS     10.03%   10.03%    225.18%     10.73%
   3   LGEN      8.64%    8.64%    194.14%     10.03%
   4   IMB       7.94%    7.94%    178.42%      9.51%
   5   WDS       7.83%    7.83%    175.93%      9.17%
   6   PHP       7.42%    7.42%    166.64%      8.88%
   7   BT.A      7.41%    7.41%    166.52%      8.67%
   8   TW.       7.34%    7.34%    164.81%      8.51%
   9   AV.       7.18%    7.18%    161.25%      8.36%
  10   RIO       6.29%    6.29%    141.33%      8.15%
  11   IGG       6.03%    6.03%    135.44%      7.96%
  12   BLND      5.97%    5.97%    134.01%      7.79%
  13   BHP       5.45%    5.45%    122.49%      7.61%
  14   NG.       5.41%    5.41%    121.51%      7.46%
  15   LLOY      5.29%    5.29%    118.75%      7.31%
  16   SMDS      5.08%    5.08%    114.13%      7.17%
  17   KGF       4.99%    4.99%    112.11%      7.04%
  18   UU.       4.45%    4.45%    100.00%      6.90%
  19   BP.       4.41%    4.41%     99.07%      6.77%
  20   RKT       4.30%    4.30%     96.59%      6.65%
  21   TSCO      4.03%    4.03%     90.58%      6.52%
  22   ADM       3.81%    3.81%     85.65%      6.40%
  23   SHEL      3.79%    3.79%     85.14%      6.28%
  24   ULVR      3.60%    3.60%     80.84%      6.17%
  25   SSE       3.59%    3.59%     80.57%      6.07%
  26   GSK       3.52%    3.52%     79.03%      5.97%
  27   SGRO      3.27%    3.27%     73.35%      5.87%
  28   TATE      2.96%    2.96%     66.53%      5.77%
  29   DGE       2.96%    2.96%     66.51%      5.67%
  30   PSON      2.35%    2.35%     52.70%      5.56%
  31   BA.       2.24%    2.24%     50.36%      5.45%
  32   AZN       1.87%    1.87%     42.04%      5.34%
  33   HLN       1.81%    1.81%     40.71%      5.23%
  34   IMI       1.61%    1.61%     36.13%      5.13%
  35   S32       1.59%    1.59%     35.76%      5.03%
                                                     
       Median    4.45%    4.45%                      
       Mean      5.03%    5.03%

The column headed "Net" is superfluous, dating back to the days when dividends were traxed at source. The right hand column shows the yield of the shares above each point. It tells you what the yield of the portfolio would be if you only held the shares down to that point. So if you only held the top 15, the yield would be 7.31%, but it wouldn't be very diverse. You can go down to the 30th share, which would give you 5.56%. The actual yield by the way, is 4.91%. The bottom four holdings are below my cut-off point. but I am content to hold them for now. Haleon, of course, was devolved from GSK and has never had a high yield. It has, however given me a decent total return to date. Here is the list for the current portfolio:

EPIC   Share                            IRR   
ADM    Admiral Group plc                13.66%
AV.    Aviva plc                         7.13%
AZN    AstraZeneca plc                  15.89%
BA.    BAe Systems plc                  13.05%
BATS   British American Tobacco plc      7.40%
BLND   British Land plc                  3.81%
BHP    BHP Group Ltd                     9.52%
BP.    BP plc                           11.50%
BT.A   BT Group plc                      6.71%
DGE    Diageo plc                       12.41%
GSK    GlaxoSmithKline plc               7.38%
HLN    Haleon                           16.73%
IGG    IG Group Holdings plc            -0.94%
IMI    IMI plc                          41.98%
IMB    Imperial Brands plc              21.17%
KGF    Kingfisher plc                    5.81%
LGEN   Legal & General Group plc         9.52%
LLOY   Lloyds Banking Group plc         16.64%
NG.    National Grid plc                13.19%
PHP    Primary Health Properties plc    -5.74%
PSON   Pearson plc                       6.28%
RKT    Reckitt Benckiser Group plc       6.21%
SHEL   Shell plc                         8.83%
RIO    Rio Tinto plc                    28.66%
S32    South32 Ltd                       9.15%
SGRO   Segro plc                         8.87%
SMDS   DS Smith plc                     14.64%
SSE    Scottish & Southern Energy plc    9.58%
TATE   Tate & Lyle plc                  12.10%
TSCO   Tesco plc                         6.81%
TW     Taylor Wimpey plc                 4.38%
ULVR   Unilever plc                      9.13%
UU.    United Utilities Group plc        9.47%
VOD    Vodafone Group plc                0.08%
WDS    Woodside Energy Ltd               3.79%

You can see the obvious back sliders, but IMI has been by far the best performer, since first bought in 2009 at 265p, with a starting yield of 7.8%.

TJH

[micrographia]

Until recently it was yielding around the same as the FTSE100. It’s also the highest yielding share in its sector, an important one in the FTSE100 which you might want to include in your portfolio on diversification grounds, which used to count for something IIRC? If you choose the 15 highest yielding shares from different sectors in the FTSE100 without caring what those sectors are, your last few picks won’t be on a massively better yield than GSK anyway.

It wouldn’t be picked as a new share for a HYP as it doesn’t have the necessary 5 year divi record (never mind it’s dismal decade-long divi record). If you already hold it, a decision to top up will surely depend on the context of your portfolio and any system you might have in place for such matters.

EEM

[tjh290633]

Until recently it was yielding around the same as the FTSE100. It’s also the highest yielding share in its sector, an important one in the FTSE100 which you might want to include in your portfolio on diversification grounds, which used to count for something IIRC? If you choose the 15 highest yielding shares from different sectors in the FTSE100 without caring what those sectors are, your last few picks won’t be on a massively better yield than GSK anyway.

It wouldn’t be picked as a new share for a HYP as it doesn’t have the necessary 5 year divi record (never mind it’s dismal decade-long divi record). If you already hold it, a decision to top up will surely depend on the context of your portfolio and any system you might have in place for such matters.

EEM

I have gone through my portfolio and selected the highest yielding share in each of my own defined sectors.

Rank   Sector            Epic   Yield    Cum Mean
   1   Telecom           VOD    11.37%     11.37%
   2   Tobacco           BATS    9.93%     10.65%
   3   Insurance         LGEN    8.63%      9.98%
   4   Oil/Gas           WDS     7.77%      9.42%
   5   Property          PHP     7.28%      9.00%
   6   Construction      TW.     7.17%      8.69%
   7   Mining            RIO     6.27%      8.35%
   8   Gambling          IGG     5.98%      8.05%
   9   Gas Dist          NG.     5.39%      7.75%
  10   Bank              LLOY    5.30%      7.51%
  11   Retail            KGF     5.08%      7.29%
  12   Paper             SMDS    5.06%      7.10%
  13   Water Util        UU.     4.47%      6.90%
  14   Consumer Gds      RKT     4.31%      6.71%
  15   Electric Supply   SSE     3.54%      6.50%
  16   Pharma            GSK     3.47%      6.31%
  17   Food              TATE    2.94%      6.12%
  18   Publishing        PSON    2.33%      5.90%
  19   Engineering       BA.     2.26%      5.71%
  20   Metallurgy        IMI     1.61%      5.51%

As you can see, pharmaceuticals come 16th in the ranking. You could argue that Utilities should be a single sector, which would elevate GSK to 13th position. Looking at the FT's World Markets at a Glance, https://markets.ft.com/Research/Markets ... &Type=GWSM the current yield on the FTSE100 is 3.64%, so it would need a little leeway to include GSK.

TJH

[Arborbridge]

When bought the yield should be above the ftse100 yield.

Quite so, and I'm suggesting that's a myopic outlook.

Suggest what you like, but last time I checked, this was the HYPP board - so people are correct in saying that GSK would not "make the cut now" and you are being contrarian

I think the general rule is that people writing here accept the HYP guidelines and do not discuss whether HYP is a good idea or not, or whther it is "myopic". There's the other board for that: but I apologise if I'm teaching grandma to suck eggs.

[Arborbridge]

Just in passing:-

I glanced down TJH's list of shares showing IRR, and the personal experience of each of us can be radically different.

Just to pick out two which caught my eye: Terry's IGG, shows -0.94% whereas my IGG shows 10.7% (average position 7th best); TESCO 6.8% whereas my TESCO shows 0.55%, (average position 33rd).

It's not wrong or right - just different.

[micrographia]

Looking at the FT's World Markets at a Glance, https://markets.ft.com/Research/Markets ... &Type=GWSM the current yield on the FTSE100 is 3.64%, so it would need a little leeway to include GSK.

TJH

Indeed. For full disclosure I topped up a couple of weeks ago (to maintain portfolio diversification) and GSK was yielding 3.65%. I'm personally of the opinion that if a share is yielding so close to the FTSE average that a couple of weeks SP movement can rule it out or in, then it qualifies for inclusion, especially if its the highest yield in a sector that's a major FTSE100 constituent. HYP is not a completely mechanical strategy

Last time I topped up before that was 2018 when optimism and a yield north of 5% helped offset concerns about the static divi, and before that it was 2013, again above 5% and the divi was still growing. Payout may be creeping up again, so hopefully better times ahead for GSK income investors. Be good if HLN starts to pull its weight as well.

The quibbling about inclusion as a new purchase (as opposed to a top-up, which is different to the original fire and forget strategy anyway) on the grounds of yield seems odd when its divi record rules it out anyway .

EEM

[Arborbridge]

The quibbling about inclusion as a new purchase (as opposed to a top-up, which is different to the original fire and forget strategy anyway) on the grounds of yield seems odd when its divi record rules it out anyway .

EEM

It's a good point - the dividend record alone would make GSK an invalid new choice. After the long held dividend, one or two of us would even be taking this as a danger sign to sell (not that I have BTW).


Arb.

[kempiejon]

It's a good point - the dividend record alone would make GSK an invalid new choice. After the long held dividend, one or two of us would even be taking this as a danger sign to sell (not that I have BTW).

Many years ago I realised that historic rate of increase of dividend was going to be factor in my share selection. Many years ago GSK still had a history of increasing dividends. When I was tidying my unsheltered holdings and moving income shares into the ISA GSK unsheltered was sold and not rebought.