GlaxoSmithKline (GSK) delivered better-than-expected third-quarter results and raised its annual profit outlook, lifting its shares on Wednesday (October 27) after strong sales of key drugs and cost cutting ahead of a planned split next year.

GSK now expects 2021 adjusted earnings per share to decline by between 2 per cent and 4 per cent at constant exchange rates, excluding any boost from its Covid-19 offerings. It had previously expected profit to fall by mid-to-high single digit percentages.

The results and outlook sent GSK’s London-listed shares up 2.1 per cent in early afternoon trade, after hitting seven-week highs.

The improved outlook rests on expected pharmaceuticals sales growth, despite a forecast for lower vaccine sales as a surge in the more-infectious coronavirus Delta variant delayed an expected recovery, including its key shingles vaccine, Shingrix.

“As people didn’t want to go out and leave their houses and (health systems) were really prioritising mass scale vaccination, that was the main hit. These are deferred and not lost sales for sure and it’s good to see us firmly on the recovery track,” GSK CEO Emma Walmsley said on a results call.

Turnover at the world’s biggest vaccine maker by sales rose 5 per cent to £9.07 billion pounds for the three months to September 30, while adjusted earnings were up 3 per cent to 36.6 pence per share.

Analysts had expected third-quarter earnings of 29.4 pence per share on sales of 8.73 billion pounds, a company-compiled consensus showed.

GSK said it was sticking with its plan to spin off consumer health in 2022, after a report the business could attract bids from private equity firms.

Activist investors Elliott and Bluebell have called for a sale of the unit, among other proposals for “New GSK”, including leadership changes.

“We also continue to make excellent progress towards unlocking the value of Consumer Healthcare through a successful demerger in mid-2022,” Walmsley said in Wednesday’s statement.

A new chair of the consumer healthcare business is expected to be announced before the end of the year, GSK said.

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