Sanofi-Aventis SA (Sanofi-Aventis) has reported net sales of EUR27.5 billion, for the full year of 2008, up 3.7%, compared with the net sales of EUR28 billion in the previous year-end. It also reported net income of EUR3.8 billion, or EUR2.94 per share, for the full year of 2008, compared with net income of EUR5.2 billion, or EUR3.91 per share, in the previous year-end.
EPS growth at constant euro/dollar exchange rates above guidance (up 11.2% against guidance of around 9%)
Solid sales performance driven by Lantus (up 27.7%), Taxotere (up 13.2%), Lovenox (up 10.6%), Plavix (up 10.5%), Aprovel (up 14.2%) and vaccines (up 9.6%)
Successful launch of Pentacel and filing for approval of Multaq and Ciltyri in the US and Europe
Growth ahead of the market in the US, and double-digit growth in emerging markets and in Japan
Continued improvement in operating ratios
Net debt reduced to EUR1.8 billion
Proposed dividend of EUR2.20 per share, payable April 28, 2009
In 2009, sanofi-aventis expects growth in adjusted EPS excluding selected items(1) of at least 7% at constant exchange rates, barring major adverse events such as the launch of a generic of Lovenox in the US
Sanofi-aventis generated fourth-quarter net sales of EUR7,089 million, a rise of 3.6% on a comparable basis. The appreciation of the US dollar against the euro meant that exchange rate movements had a favorable effect of 1.1 points, despite the impact of other currencies. Changes in Group structure had an unfavorable effect of 2.1 points, and included the discontinuation of commercialization of Copaxone in the US and Canada by sanofi-aventis in accordance with the agreements signed with Teva. On a reported basis, net sales rose by 2.6%.
Gross profit was up 5.2% at EUR5,529 million. Other revenues increased by 18.4%, benefiting from the impact of the rising dollar on royalties received on sales of Plavix and Avapro in the US. The ratio of cost of sales to net sales improved by 1.2 points to 27.2%, reflecting to favorable foreign exchange effects and the discontinuation of commercialization of Copaxone in North America.
Research and development expenses were EUR1,306 million, a rise of 2.8% (1.3% at constant exchange rates), and include the full cost of discontinuing trials on Acomplia (EUR41 million). Selling and general expenses fell by 2.6% (-4.6% at constant exchange rates) to EUR1,945 million. The ratio of selling and general expenses to net sales improved by 1.5 points to 27.4%, reflecting our ongoing cost adaptation measures
Other current operating income and expenses showed a net expense of EUR24 million, against net income of EUR15 million in the comparable period of 2007. This item includes an improvement in net income from alliances (primarily on Copaxone), but also additional provisions for environmental risks, mainly in the United States.
Operating income – current(1) rose by 12.1% to EUR2,198 million. Excluding foreign exchange effects, the rise was 11.4%.
Net financial expenses totaled EUR122 million (vs. EUR28 million in the fourth quarter of 2007), mainly due to the impact of the evolution of the EUR/$ exchange rate on the hedging of dividends from our American subsidiaries to the parent company. Interest expense was little changed at EUR41 million, against EUR48 million in the fourth quarter of 2007.
The effective tax rate was 26.9%, reflecting the adjustment of the effective tax rate for the first 9 months of the year (29.6%) to align on the full-year effective rate (29.0%).
The share of profits from associates was up 23.6% at EUR220 million, with the share of after-tax profits from territories managed by BMS under the Plavix and Avapro alliance up 19.5% at EUR178 million.
Minority interests increased by 13.4% to EUR110 million. The share of pre-tax profits paid to BMS from territories managed by sanofi-aventis was up 10.4% at EUR106 million.
Adjusted net income excluding selected items(1) was up 13.9% at EUR1,627 million.
Adjusted earnings per share (EPS) excluding selected items(1) was EUR1.25, 16.8% higher than the 2007 fourth-quarter figure of EUR1.07.
Sanofi-aventis generated 2008 full-year net sales of EUR27,568 million, up 3.7% on a comparable basis. Foreign exchange movements had an unfavorable impact of 3.9 points, over 70% of which was related to the US dollar. Changes in Group structure had an unfavorable effect of 1.5 points, primarily reflecting the discontinuation of commercialization of Copaxone in North America from the second quarter. On a reported basis, net sales fell by 1.7%.
Gross profit was EUR21,482 million. Royalty income was up 8.1% at EUR1,249 million, driven by the performance of Plavix in the United States and despite a negative impact of the US dollar over the year as a whole. The ratio of cost of sales to net sales improved by 0.4 of a point to 26.6%.
Research and development expenses totaled EUR4,575 million, up 0.8% (3.2% at constant exchange rates). Costs arising from the discontinuation of programs (primarily Acomplia) had a negative effect of approximately one percentage point. Selling and general expenses were down 5.1% (-2.0% at constant exchange rates) at EUR7,168 million. The selective cost adaptation policy implemented since 2006 led to a further improvement of 0.9 of a point in the ratio of selling and general expenses to net sales, which fell to 26.0%.
Other current operating income and expenses showed net income of EUR203 million, versus net income of EUR276 million in 2007. In terms of alliances, income from Copaxone more than offset lower income from other products (Actonel, Allegra, etc). Other factors explaining the year-on-year change in this item include lower gains on disposals, environmental provisions, and less favorable foreign exchange results.
Operating income – current(1) was EUR9,762 million (up 0.9% on a reported basis, or 8.5% at constant exchange rates), and represented 35.4% of net sales – an improvement of 0.9 of a point relative to 2007.
Net financial expenses were EUR270 million, against EUR139 million in 2007. Interest expense on debt totaled EUR191 million, compared with EUR223 million in 2007. Financial foreign exchange brought a net charge of EUR74 million, versus a net gain of EUR87 million in 2007; this was mainly due to the impact of the differential in interest rates between the U.S. dollar and the euro on hedges of cash invested by our American subsidiaries.
The effective tax rate was 29.0%, compared with 30.6% in 2007, due in particular to tax rate cuts in Germany.
The share of profits from associates was up 17.1% at EUR890 million, with the share of after-tax profits from territories managed by BMS under the Plavix and Avapro alliance 18.9% higher at EUR624 million. The contributions from Sanofi PastEURMSD and Zentiva rose, while the Merial contribution fell due to adverse foreign exchange effects.
Minority interests were 5.3% higher at EUR441 million. The share of pre-tax profits paid to BMS from territories managed by sanofi-aventis was up 4.7% at EUR422 million.
Adjusted net income excluding selected items(1) was up 3.2% at EUR7,186 million.
Adjusted earnings per share (EPS) excluding selected items(1) was EUR5.49, 6.2% higher than the 2007 figure of EUR5.17.