4 Min Read
PARIS (Reuters) - French drugmaker Sanofi (SASY.PA) posted slightly better-than-expected profit in the fourth quarter and predicted earnings would improve further in 2014, helped by growth in its diabetes and rare diseases units, and in emerging markets.
Sanofi also said on Thursday that it would raise its dividend on 2013 results to 2.80 euros per share from 2.77 euros the previous year.
The company, which suffered three straight quarters of falling net income, two profit warnings and several product setbacks last year, forecast business earnings per share (EPS) would grow 4 to 7 percent this year at constant exchange rates, "barring unforeseen adverse events".
Chief Executive Chris Viehbacher told reporters on a conference call that Sanofi was now beyond its so-called patent cliff, with no major drug set to lose patent protection this year.
Drugmakers worldwide have been struggling with patent expiries as well as cutbacks in healthcare spending by cash-strapped European governments. Sanofi has in recent years turned to rare diseases, emerging markets, over-the-counter treatments, animal health and generics to find growth.
Sanofi said generic competition slashed 1.25 billion euros ($1.69 billion) from its sales of key legacy drugs in the United States and Europe last year.
France's second-largest listed company is banking on the growing need for healthcare worldwide and its geographic spread to help it perform well this year despite economic uncertainty in emerging markets, the CEO said.
Weakening currencies in emerging markets, where Sanofi makes more than a third of its revenue, cut 5.2 percentage points from sales growth last year.
Sanofi's full-year business net income, which excludes items such as amortization and legal costs, fell 17.5 percent, hit by cheaper generic competition, manufacturing and inventory glitches in Canada and Brazil, and the ripples of a crackdown on sales practices in China.
But profit picked up in the fourth quarter thanks to double-digit growth in sales of Sanofi's blockbuster diabetes drug Lantus, its Genzyme rare diseases unit, and a gradual recovery in Brazil and China.
Quarterly net income rose 16.8 percent to 1.81 billion euros ($2.45 billion) and was up 30.5 percent at constant exchange rates.
Sales fell 0.8 percent to 8.46 billion euros, with currency effects knocking 7.3 percentage points off growth.
Analysts polled by Thomson Reuters I/B/E/S had on average forecast quarterly sales of 8.4 billion euros and net income of 1.77 billion.
Full-year sales in emerging markets rose 4.4 percent to 10.96 billion euros at constant exchange rates. This marked a slowdown from the 8.3 percent growth recorded in 2012, hit by inventory issues in Brazil.
Asked what revenue growth Sanofi expected in emerging markets this year, Viehbacher said: "We're not going to give a forecast for 2014 at that granular level but the potential for double-digit growth is certainly there despite the turbulence."
He pointed to favorable demographics and the emergence of a large middle class in countries like China and India, noting that "people don't stop getting sick because the GDP suddenly has declined".
($1 = 0.7390 euros)
Editing by James Regan