Glaxo Says Dividend Is Secure as Analysts Question PayoutOliver Staley
GlaxoSmithKline Plc’s dividend is secure, Chief Executive Officer Andrew Witty said after analysts questioned whether the company could maintain its payout.
Glaxo expects to pay a dividend of 80 pence a share for 2014, Witty said in a brief interview after a shareholder meeting for a vote on transactions with Novartis AG.
“I don’t think people should be concerned about that,” Witty said.
His comment, which reiterated a forecast Glaxo made in October when reporting third-quarter earnings, reassured investors. Glaxo rose 2.3 percent to 1,378.50 pence in London, extending gains on Witty’s remarks. Shares have fallen 14 percent this year.
Liberum Capital Ltd. said in July that the risk of a dividend cut at Glaxo was “increasing dramatically” after the company reduced its profit forecast for the year. Glaxo will pay out an estimated 85 percent of profit in dividends this year, the highest among all large European and U.S. pharmaceutical companies, Bloomberg Intelligence said this month.
Glaxo has been grappling with sluggish sales of respiratory drugs in the U.S. this year.
Besides the dividend, another 4 billion pounds will be returned to shareholders following the completion of the deal with Novartis, Witty reiterated today. Glaxo is selling its cancer drugs to Novartis for as much as $16 billion and buying most of the Swiss company’s vaccines business for $7.1 billion, and the two are forming a joint venture in consumer health.