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Fitch: GlaxoSmithKline can absorb repurchases
Fitch Ratings said GlaxoSmithKline plc (AA/F1+/stable) can absorb the increase of £1 billion per annum in share repurchases over the next three years due to its good cash flow generation.
GlaxoSmithKline has a history of large share repurchase, which accounted for around £1 billion cash outlays in each of the past three years, Fitch said.
In September, the company completed its second phased £4 billion share repurchase program and announced Thursday its intention to begin immediately a new phased share buyback program totaling £6 billion. The company expects this program to be completed over the next three years including £2 billion in the first 12 months.
GlaxoSmithKline is highly cash-generative, the agency said. During fiscal year 2005, cash generated by operating activities increased 17% to £7.7 billion mainly due to higher operating profits.
The company's lease- and pension-adjusted net debt-to-EBITDA ratio in 2005 was low for the ratings at 0.3x, Fitch added.
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