Pre-quarterly Results Communication
Paris - Le 12 janvier 2014 - Sanofi (EURONEXT: SAN and NYSE: SNY) has compiled the following items for consideration to assist in the financial modeling of the Group's Q4 2014 results.
Q4 2013 Business EPS
When including the application of IFRIC 21, Sanofi's business EPS was €1.37 in Q4 2013.
http://en.sanofi.com/Images/36157_2014_04_IFRIC21.pdf
Foreign Currency Impact
The full year business EPS sensitivity to the U.S. Dollar and Japanese Yen are the following:
- 1% variation in €/$ corresponds to an impact of 0.5% on 2014 business EPS
- 1% variation in €/¥ corresponds to an impact of 0.1% on 2014 business EPS
The main currency variations in Q4 2014 versus Q4 2013 and in full-year 2014 versus full-year 2013 were:
| €/... | Q4 2013 | Q4 2014 | Var. | FY 2013 | FY 2014 | Var. | |
| U.S. Dollar | 1,3611 | 1,2492 | -8% | 1,3282 | 1,3289 | 0% | |
| Japanese Yen | 136,6589 | 142,9776 | 5% | 129,6595 | 140,3772 | 8% | |
| Canadian Dollar | 1,4284 | 1,4189 | -1% | 1,3685 | 1,4669 | 7% | |
| Australian Dollar | 1,4681 | 1,4599 | -1% | 1,3770 | 1,4724 | 7% | |
| British Pound | 0,8405 | 0,7891 | -6% | 0,8493 | 0,8064 | -5% | |
| Chinese Yuan | 8,2898 | 7,6792 | -7% | 8,1655 | 8,1883 | 0% | |
| Brazilian Real | 3,0984 | 3,1782 | 3% | 2,8670 | 3,1228 | 9% | |
| Mexican Peso | 17,7344 | 17,3085 | -2% | 16,9644 | 17,6621 | 4% | |
| Argentina Peso | 8,2352 | 10,6397 | 29% | 7,2719 | 10,7763 | 48% | |
| Venezuelan Bolivar | 8,5543 | 7,8650 | -8% | 7,9964 | 8,3714 | 5% | |
| Russian Rubble | 44,3216 | 59,9281 | 35% | 42,3248 | 51,0113 | 21% | |
| Turkish Lira | 2,7562 | 2,8255 | 3% | 2,5329 | 2,9070 | 15% | |
| South African Rand | 13,8381 | 14,0069 | 1% | 12,8308 | 14,4065 | 12% | |
| Indian Rupee | 84,4231 | 77,3748 | -8% | 77,8753 | 81,0689 | 4% | |
Based on the evolution of foreign currency rates in full-year 2014, Sanofi estimates that the foreign currency impact on full-year 2014 financial results should be approximately -2.5 percentage points on sales and between -3 and -4 percentage points on business EPS.
Based on the evolution of foreign currency rates in Q4 2014, Sanofi estimates that the foreign currency impact on Q4 2014 financial results should be approximately +2.5 percentage points on sales and between +2 and +4 percentage points on business EPS.
Business Items
Vaccines
As previously communicated on October 28, Sanofi expects a continued progressive improvement of supply for Pentacel® and a continuation of the influenza vaccines trend seen in the Northern Hemisphere in Q3 2014 driven by its differentiating vaccines strategy.
CHC
Several products previously recorded in prescription pharmaceuticals in 2013 were transferred to Consumer Healthcare products in 2014. In Q4 2013, sales of products which were previously recorded in prescription pharmaceuticals and are now transferred to Consumer Healthcare totaled €68 million.
Renvela® in the U.S.
Impax was granted a license to sell in the U.S a limited allotment of bottles of an authorized generic version of Renvela® tablets starting from April 2014. The specific allotment corresponds to up to 10% of the total sevelamer sales in the U.S. in 2013. In Q3 2014, U.S. sales of Renvela® / Renagel® were down 22.0% to €103 million.
Generics
In Q4 2013, sales of Generics increased 12.0% to €478 million, reflecting strong improvement in Brazil where sales grew 23.6% (€59 million). In Q3 2014, sales of Generics increased 8.3% to €451 million reflecting the recovery in Brazil (€76 million) and lower sales in Western Europe (down 3.9%) and in the U.S. (down 24.3%).
Japan
In Q3 2014, sales in Japan decreased 7.2% to €507 million, reflecting the impact of generic competition to Allegra®, Myslee®, Amaryl® and Taxotere® partially offset by the performance of Plavix® and Vaccines.
Financial Results
R&D expenses
In Q4 2013, R&D expenses decreased 8.0% (or down 4.8% at constant exchange rates) to €1,246 million. In the first nine months of 2014, R&D expenses were down 1.4% to €3,473 million (or up 0.6% at constant exchange rates), the ratio of R&D to net sales was 0.3 percentage points lower at 14.1% compared with the same period of 2013. On October 28, Sanofi communicated that its R&D expenses would slightly increase in 2014 while staying below the €5 billion threshold.
SG&A
In Q4 2013, SG&A expenses decreased 8.7% (or down 3.1% at constant exchange rates) to €2,148 million. In the first nine months of 2014, SG&A expenses increased 1.1% to €6,526 million (an increase of 4.9% at constant exchange rates). In the first nine months, the ratio of selling and general expenses to net sales was stable at 26.4%. On October 28, Sanofi communicated that it would continue to invest in pre-marketing activities in Q4 2014 for various product launches.
Other operating income net of expenses
In Q4 2013, this line was €251 million and included:
- A payment of €92 million before tax received following the amendment of the Actonel agreement with Warner Chilcott;
- An income of €93 million before tax resulting from the Rituxan arbitration between Hoechst and Genentech.
On October 28, in Q4 2014, Sanofi communicated that it would have a positive impact from the disposal of some minor products in France and Italy. Sanofi projects this positive impact to be approximately €70 million before tax.
Net financial expenses
In Q4 2013, net financial expenses were €103 million and included a capital gain (€29 million) linked to the partial sale of a financial investment. In Q3 2014, net financial expenses were €139 million.
Tax Rate
The effective tax rate for Q4 2013 was 23.9%. The effective tax rate for the full year 2013 was 24.0%. Sanofi estimates that its effective tax rate for 2014 will be approximately 25%.
Share of profits from associates
As of April 4, 2014, Sanofi accounts for its stake in Regeneron using the Equity method. At the end of Q4 2014, Sanofi held an ownership interest in Regeneron of 22.5%.
Number of Shares
The average number of shares was approximately 1,315.8 million in Q4 2014 versus 1,321.1 million in Q4 2013 and approximately 1,315.8 million in 2014 versus 1,323.1 million in 2013.
Share Buyback
In Q4 2014, Sanofi bought back 9.26 million shares totaling €697.5 million. Over 2014, Sanofi repurchased 23.67 million shares totaling €1,797.3 million.
Forward-Looking Statements
This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements are statements that are not historical facts. These statements include projections and estimates and their underlying assumptions, statements regarding plans, objectives, intentions and expectations with respect to future financial results, events, operations, services, product development and potential, and statements regarding future performance. Forward-looking statements are generally identified by the words "expects", "anticipates", "believes", "intends", "estimates", "plans" and similar expressions. Although Sanofi's management believes that the expectations reflected in such forward-looking statements are reasonable, investors are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of Sanofi, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include among other things, the uncertainties inherent in research and development, future clinical data and analysis, including post marketing, decisions by regulatory authorities, such as the FDA or the EMA, regarding whether and when to approve any drug, device or biological application that may be filed for any such product candidates as well as their decisions regarding labelling and other matters that could affect the availability or commercial potential of such product candidates, the absence of guarantee that the product candidates if approved will be commercially successful, the future approval and commercial success of therapeutic alternatives, the Group's ability to benefit from external growth opportunities, trends in exchange rates and prevailing interest rates, the impact of cost containment policies and subsequent changes thereto, the average number of shares outstanding as well as those discussed or identified in the public filings with the SEC and the AMF made by Sanofi, including those listed under "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements" in Sanofi's annual report on Form 20-F for the year ended December 31, 2013. Other than as required by applicable law, Sanofi does not undertake any obligation to update or revise any forward-looking information or statements.
