*GlaxoSmithKline (GSK) gave its Q2 results two ways, under accounting principals, and stripping out one-time losses and write-downs for restructuring and M&A into “core operating profit”. Surprise, surprise, the latter turned GSK's £1.8 bn loss ($2.35 bn, minus 9 pence/sh) into a net profit of £1.83 bn. Adjusted for currency effects this grew 15%, and handily beat the Dow Jones analyst poll core operating profit average of £1.64 bn. Core net profit as adjusted came in at 24.5 pence/sh.

Sales at £6.532 bn beat the consensus forecast of £6.34 bn. While as anticipated Advair sales fell 7% the pharma business overall saw sales rise 2% to £3.882 bn in the quarter. New drugs accounted for 23% of sales led by HIV drugs like Tivicay and Triumeq, and new respiratory lines like Relvar/Breo, Anora, Nucala, and Incruse. Vaccines did even better, up 11% in Q2 to £960 mn thanks to best-seller meningitis jabs and a 39% rise in vaccine operating profit and a 28% -plus core operating margin (up 6.4 percentage points) y/y.

Consumer healthcare lines acquired from NVS hit £1.7 bn; there is money in toothpaste and Advair after all the flak CEO Sir Andrew Witty took for the OTC businesses acquired last year. This business produced core operating profits of £238 mn, more than double 2015 levels, while sales only rose 7%. This was a key strategy switch for which the CEO got criticized by a whole slew of analysts, but he has been proven right. As price pressures on ethical drugs increase, what you want to do is sell OTC products,

Among the “one-offs” excluded from core operating profits were IPO share-based awards, strategic items, compensation for seniors leaving the firm, hedging losses, and a full kitchen sink of other stuff. It also excluded legal charges and accounting for the put option discount and preferential dividends paid under its jv with NVS, and unwinding of the contingent liability for taking control of the ViiV AIDs sub, a former jv with NVS, Pfizer, and Japan's Shinogi, mounting to £212 bn of the total, marginally lower than they cost in Q2 2015.

GSK gained because most of its revenue is earned outside Britain which translated into more pounds, but also boosted the impact of its dollar-denominated liabilities under the asset swap with Novartis 15 months ago. While US and UK drug sales grew international fell 6% on a reported basis and 4% pro-forma, hit by declines of 7% and 5% respective in emerging markets. The main cause was a continuing 20%+ drop in China business which was hit by an “ongoing reshaping programme and healthcare reforms”. What this amounts to is China-enforced cuts in drug prices for what GSK sells there. A minor hiccup is the Venezuela mess which results in only essential medicines going there, and probably not being paid for.

It will also gain about 9% in sterling sales if the currency drop post-Brexit continues, but says it is “monitoring” the situation and can adjust to changes. Its expectations for core EPS growth this year is 11-12% but if sterling echange rate losses come to 2015 levels, the boost would be 19%.

GSK will spend £275 mn ($360 mn) to expand drug production at 3 UK sites and called Britain an “attractive location” despite having backed “Bremain”. It will pay Janssen (a sub of Johnson & Johnson) £175 mn for an asthma monoclonal antibody, anti-IL-33R to enter phase 1 trials adding to its respiratory franchise.

GSK declared a 19 pence quarterly dividend and said it expects to pay out a total of 80 pence/sh this calendar year. The stock rose 2.5% in London and hit a new 52-wk high.

*Virgin Money (LON: VM) rose 8.7% after it reported H1 results which were up 53% on prior year levels, at £101.8 mn, with underlying return on tangible equity hitting 12.2% vs prior year H1 level of 9,.5%. Costs were contained to 58.5% of income from 68,3% the year before. Statutory profit before tax came to £93.7 mn vs prior year H1 £55 mn. Mortgages were the main grower with loans up 29% y/y, 82% residential and the remainder buy-to-let, Credit card balances rose 31% to £2.1 bn while deposits (what all this runs on) came to £27.1 bn, up 8%, a nicely balanced book for a bank, Its tier 1 Basekl 3 equity hit 15.3% at the end of the half and its cpaital ratio came to 17,5%. Only 0.16% of loans were non-performing vs a UK industry average of 2.5%. (VRGDF)

Again this UK firm boasted that it “is in a strong position to deal with a period of post-referendum uncertainty” and that “since the vote has experienced strong customer demand.” Barclays analysts raised VM to a buy today. (VRGDF for the ADR.)

*Cemex (CX) nearly doubled its net profit to $205 mn n Q2 thanks to higher sales and prices in key markets US and Mexico offsetting drops in Europe and Latin America. Higher operating margins in its key markets as well as lower taxes also helped. Its operating cash-flow (EBITDA) rose 6% as reported and 16% adjusted for currency and asset changes to $771 mn. Free cash flow after capex rose 5-fold to $478 mn boosted by a new cash reserve. CX also booked $507 mn from the listing of its Philippines sub. Debt fell by $1.151 bn to $14.8 bn at end June helping CX in trying to achieve an investment grade rating again, by lowering its debt to cash-flow ratio from the current 4.75x to 3x. It was raised to single A from A- by Fitch Ratings this week for Mexican issues but remains BB- for international ones.

CEO Fernando Gonzales said “our solid results demonstrate the resilience of our portfolio, largely comprised of high-growth markets that are experiencing attractive supply-demand conditions. We saw higher consolidated volumes as well as continued favorable results from our 'value-before-volume' strategy.” The US accounted for $1.036 bn of the $3.7 bn of total sales in Q2, while Mexico only accounted for $796 mn, and that is before CX wins the gig to build the great wall of Trump!

*Banco Santander (Madrid: SAN) (SAN) reported on its H1 excluding the US of euros 2.911 bn off nearly a third y/y because of what-else? One-offs of restructuring (branc closures and layoffs) plus contributions to the European resolution Fund, and the declining euro, partly offset by the euros 227 mn sale of its stake in Visa Europe. Excluding those the underlying profit rose 9% to euros 3.28 bn. One booster was much better performance in Brazil which delivered 19% of total profits. Spain only chipped in 15% and this is barely below the UK's 20%. Net operating income hit euros 11.275 bn, up 2%. That produced net profits in Q2 at euros 1.278 bn ($1.48 bn) up from the euros 1 bn forecast by analysts, but still a big drop from the euros 2.54 bn booked in Q2 last year helped by a reversal of provisions in Brazil which did not repeat, this Q2 the one offs amounting to euros 368 mn negative while the year before they were euros 835 mn positive.

Without these and the lower euro impact, in Q2 the Spanish bank's ordinary profit rose 9% to euros 3.28 bn. SAN boasted that when “global macroeconomic outlook deteriorated” its improved its balance sheet quality, its solvency, and its profitability. It efficiency ratio rose 0.2% to 47.9%. Loan loss provisions were essentially flat at euros 4.613 bn and non-performing loans fell to 4.29% of loans outstanding down 0.35% y/y.

It will pay a 6.11 cent dividend per share Aug.8, up 10% of which half will be cash and the rest new shares. The breakdown will be different in different places SAN is quoted depending on local regs, but the stock rose 4%.

The Financial Times responded by blaming SAN for mañana delays in boosting its capital ratios, perhaps more necessary than higher divvies. Investors and analysts want Santander to move faster in getting its US management and auditing up to scratch and also to meet Fed stress tests.

*Harry Geisel reports on Validus Holdings (VR) whose operating eps fell to 66 cent this Q2 from $1.16 last,. However eps rose to $1.14 from 75 cents, in both cases including exceptional events normal in a property & casualty company, in this case Canadian wildfires and a 186% increase in fixed income investment profits. (I wonder how they managed that?) Strip away the unexceptional exceptional items and you get a reinsurance firm that makes money in very tough times. It bought back 1.45 mn shares during the quarter, and byu now has bought back over half its IPO capitalization. The dividend yield is nearly 3%. I'll let you know tomorrow if CEO Noonan says anything worth reporting in the conference call.

*Bonus stock Stonegate Bank (SGBK) reported Q2 earnings of $6.7 mn on revenues of $23.3 mn and boosted the share price 8% to $32.21 after the designated US bank for Cuba dealing was penalized for a large acquisition.