GlaxoSmithKline Consumer Healthcare Ltd. (erstwhile SmithKline Beecham Consumer Healthcare) continues to struggle with its performance. After reporting a strong 27% topline growth in the June quarter, the company seems to have lost the momentum. The company has reported nearly 2% decline in September quarter topline. What is worse, GSK Consumer has finished the quarter with a 32% dip in net profit.
Operating Profit (EBDIT)
Operating Profit Margin (%)
Profit before Tax
Profit after Tax/(Loss)
Net profit margin (%)
No. of Shares (eoy) (m)
Diluted Earnings per share*
Current P/e ratio
Post the strong June quarter results, it was being felt that GSK Consumer's strategy of relaunching its flagship brand 'Horlicks' in new variants had worked. But the near stagnant growth in September quarter has cast doubts on the turnaround once again. The huge dip in operating margins (nearly 8%) is a worrying sign. Almost all cost heads of the company saw a rise. The company has had to up its advertising expenditure in a bid to push the new variants in the 'Horlicks' range. Consequently, as a percentage of revenues, ad expenses have gone up to 14.4% during the quarter (10.8% last year).
As a % of sales
The year 2002 was seen as one of the worst performances by GSK Consumer in the last 5-7 years. The company finished FY03 with a 10% dip in topline and nearly 35% dip in net profit levels. The year saw a big slowdown in the malted beverage market. The company attributed this dip to an inventory correction as well as delay in commissioning of its new plant in Sonepat, which effectively meant a delay in improvement of efficiencies.
As said earlier, post the strength in the June quarter numbers it was being felt that the company's troubles are more or less over. However, a sluggish September quarter has dashed those hopes. The company's single product profile is anyway a big cause of concern, as it caps its future growth prospects. Moreover, malted beverages is not the core business for the pharma parent (GSK Pharma).
Please note, for the comparision on a YoY basis, we have taken numbers that had been stated by the management last year. The company seems to have restated some numbers, as a result of which the topline dip during September quarter is coming to 0.6% (as opposed to 1.6% shown in the first table). Similarly, the nine month topline growth is coming to 4.9% YoY (as compared to 5.9% shown in the table). The bottomline growth numbers are however, correct. We haven't received the company's press release and consequently, are showing the comparision based on the numbers made available last year.
GlaxoSmithKline Consumer's one product category focus and the parent's other 100% subsidiary were always a cause for concern. The blip in quarterly results is likely to further weaken the sentiment towards the stock. At Rs 333 the stock trades at a P/E of 20x annualised 9mFY04 earnings.
GSK Consumer Healthcare declared results for the quarter ended September 2016. The revenues dropped by 1.3% during the quarter as compared to a year ago; while the profits declined by 16.6% YoY during the quarter.
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