Glaxo pulls cash out of eurozone

LONDON: Glaxosmithkline has been pulling cash out of some euro zone countries in case the debt crisis takes a turn for the worse.

Speaking at the drug maker’s annual results presentation in London, the recently knighted chief executive Sir Andrew Witty said in the past year the company had been withdrawing “tens of millions of pounds” from “most of the eurozone” — excluding Germany.

“You don’t have money in banks you’re nervous about,” he explained. Some of that money is being used to pay dividends to shareholders, which rose more than expected, by 8% to 70p a share (plus 5p related to the sale of the North American over-the-counter brands).

GSK has also “raised the ante” on collecting debts from euro zone governments, especially in southern Europe. GSK sells many of its drugs to wholesalers but also sells some directly to hospitals. “We’ve been able to reduce our debts in southern Europe” leaving GSK with a figure that is “not scary,” said Witty. He welcomed the European Central Bank’s efforts to pump money into the banking system in the past six months, saying they’d had a “very positive effect on banking liquidity and confidence”.

“My biggest concern vis-a-vis the euro zone is continued uncertainty. In many cases the uncertainty is worse than many of the if’s.”

The crisis had sapped consumers’ confidence, said Witty.

His comments came as the pharmaceutical company reported annual profits before tax of £7.7 billion, up from £3.2 billion in 2010, reflecting cost cutting.

Turnover dropped 3% to £27.4 billion. Sales were boosted by growth in Japan, driven by the cervical cancer vaccine Cervarix, and emerging markets. This was offset by a 4% fall in Europe and a flat US performance.

Unlike Astrazeneca, which last week announced 7,350 fresh job losses, GSK is hiring more staff and moving manufacturing and service centres back to Britain.