Sanofi (SNY) reported a revenue decline of 0.2% at constant exchange rates to ~8.9 billion euros (about $10.1 billion). The company reported net profits of ~1.7 billion euros (about $1.9 billion) in 2Q16—a decrease of 8.7% compared to 2Q15.
The company’s gross margin improved by 0.2% to 70.8% in 2Q16 compared to 2Q15. This was driven by a favorable currency effect. Notably, the positive impact of Sanofi’s Genzyme and vaccines businesses at constant exchange rates was partially offset by lower sales in the Diabetes segment in US markets, generic competition with Plavix in Japan, and the negative impact of Venezuela.
The company’s research and development expenses increased by 4.5% at constant exchange rates to 1.3 billion euros (about $1.5 billion) due to increased spending on an immuno-oncology alliance with Regeneron.
Selling and general expenses increased by 3.9% at constant exchange rates to 2.7 billion euros (about $3.1 billion) due to new product launches in multiple sclerosis and the Animal Health segment.
Financial guidance 2016
Sanofi’s 2Q16 results are in line with its full-year guidance announced on February 9, 2016. The company expects its EPS (earnings per share) to be stable in 2016 at constant average exchange rates, as compared to its 2015 EPS of 5.64 euros (about $6.37), considering the changes in the US diabetes market, new product launches, and late-stage pipelines.
Sanofi has revised its expectations of currency impact and now expects a 4% negative impact of foreign exchange on EPS for fiscal 2016—under the assumption that exchange rates remain stable for the next two quarters at the average rates of July 2016. The earlier expectations were that EPS would remain neutral at average rates of March 2016.
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