By CARLO PIOVANO AP Business Writer LONDON (AP) — GlaxoSmithKline PLC, Europe’s largest drug maker, said Thursday it would cut jobs and costs after fourth quarter net profit fell 10 percent because of higher research and sales spending as well as legal charges. The company, which sells asthma treatment Advair and the Ribena range of soft drinks, booked a net profit of 1 billion pounds ($1.46 billion), down from 1.1 billion pounds in the fourth quarter of 2007. Sales rose to 6.91 billion pounds from 5.97 billion pounds a year earlier, despite increasing competition from generic drug makers on brands such as epilepsy drug Lamictal and migraine treatment Imitrex. Sales of its diabetes drug Avandia remained weak. Glaxo said profits were hurt by higher costs for research and development, expiring patents and a $400 million legal charge announced last month relating to an investigation by U.S. authorities into its marketing and promotion practices. It said it would increase its restructuring efforts and will seek to cut costs by 1.7 billion pounds a year by 2011, up from the 700 million targeted previously. The plan would come at an initial expense of 3.6 billion pounds — up from the 1.5 billion initially estimated — and will mean job cuts. The company refused to say how many jobs it would need to shed. “We will not be providing targets for job reductions and we will announce restructuring outcomes once employees, relevant works councils and trade unions have been consulted and informed,” the company said in its earnings statement. Media reports have estimated as many as 10,000 layoffs, about 10 percent of the company’s work force. CEO Andrew Witty said the company would stop giving a figure for its earnings outlook because trading conditions are uncertain during the current downturn. “This change in approach is not connected to performance,” Witty said. “We are now in a pivotal period of change as we redefine our business model to increase sales growth, reduce risk and deliver long-term sustainable financial performance to shareholders,” he said. In an analyst conference, the Chief Financial Officer Julian Heslop said the company had ample liquidity of 4.7 billion pounds with debt of only 1.7 billion pounds due through 2010. The company announced a dividend of 57 pence for 2008, up 8 percent from the previous year’s Jeremy Batstone-Carr, an analyst at Charles Stanley, said the earnings were largely better than expected — particularly the increase in the shareholder dividend. He expressed worries about the company’s move to drop its earnings outlook because it was unclear how long it would take Glaxo to reap the profits of its restructuring program.
