French drug maker Sanofi says net profit slumped in 3rd quarter on further charges

PARIS – French drug maker Sanofi said Thursday its net profit slumped by over a fifth in the third quarter as it continued to suffer the effects of overpaying for acquisitions and a painful restructuring.

Sanofi SA said its net profit fell 21 per cent to 1.21 billion euros ($1.66 billion) in the July to September quarter, from 1.54 billion euros a year earlier.

In a statement, it warned that earnings for the full year would be “at the lower end” of previous guidance, with profit down around 10 per cent before exchange rate fluctuations.

Third-quarter earnings included charges worth 689 million euros to account for the difference in what Sanofi paid to acquire companies such as Aventis, Genzyme and Merovial and what those assets are worth now. In the year to end-September, those charges amounted to 2.23 billion euros.

A restructuring charge of 71 million euros also weighed on third quarter earnings, Sanofi said. The company has spent over 5 billion euros on restructuring since 2008.

Sanofi says third-quarter sales fell 6.7 per cent as the loss of patent protection for one-time blockbuster treatments such as Plavix and Lovenox continued to have an impact. A problem supplying some vaccines in the U.S. also hurt sales.

Earnings by Sanofi’s preferred measure of profits — what it calls business earnings per share at constant exchange rates — fell 9 per cent in the third quarter. Profit slumped by 12.8 per cent by that measure last year and in August the company said it would fall a further 7 to 10 per cent this year.