But the group said it expected these figures to bear the worst scars of sterling's strength and for the comparisons to improve as the year progresses, with the final outcome somewhere between pounds 90m and pounds 100m if current rates hold.
Jan Leschly, chief executive, brushed aside the currency factors, describing the group's performance as "excellent" in spite of the "dramatic impact of exchange rate fluctuations". He said sales in the pharmaceutical and healthcare businesses remained strong, driven by the contribution of new products such as the anti-depressant Seroxat, new children's vaccines and the Nicorette and Nicoderm smoking-cessation products. "With a continued flow of new products, we are confident that we will meet our objectives for the year," he said.
Pre-tax profits came in at pounds 418m, up from pounds 387m before. The company announced a first quarter dividend raised 10 per cent to 4.41p, payable from earnings per share up 7 per cent to 10.2p.
Sales were hit by a change in the method of reimbursement from customers of Diversified Pharmaceutical Services, which manages drug buying for big US insurance companies and the like. SmithKline said this reduced risk without cutting profits. Along with the currency impact, the 64 per cent slump at DPS meant overall turnover slipped 2 per cent to pounds 1.84bn. There were mixed responses from analysts to the 7 per cent underlying growth rate after stripping out exchange factors. Some compared it unfavourably with the double-digit rises reported recently by US groups, others said SmithKline's sales on the Continent had outpaced most of its peers.
Excluding DPS, drug sales grew 12 per cent at comparable exchange rates, driven by a good performance from new products introduced in the past five years.Reuse content