Sanofi Shares Tumble After Warning of Profit Hit From Investment, Taxes

By Adria Calatayud

Shares of Sanofi fell sharply after the company warned it expects business earnings for next year to be hit by its plans to boost investment in research and development and changes in global tax regulations.

At 0809 GMT on Friday, shares in the French pharmaceutical giant were down 16% at EUR84.83.

Sanofi said it expects business earnings per share--one of its preferred metrics, which strips out exceptional items--to be roughly flat in 2024 compared with this year when excluding the impact of an expected tax-rate change. Including the expected hit from the tax changes, business EPS is expected to decline by low single digits, it said.

The company expects its effective tax rate to rise to 21% in 2024 from 19% this year.

In 2025, the company expects business EPS to rebound strongly, helped by sales growth and a cost-cutting plan that it expects to achieve 2 billion euros ($2.11 billion) in savings from 2024 to the end of the following year.

"We believe the preliminary guidance for 2024 and 2025 business EPS will be the primary focus for investors today," Barclays analysts wrote in a note to clients.

The new forecasts were issued as Sanofi outlined a plan to separate its consumer-healthcare business from its pharma operations, and reported results for the third quarter that narrowly missed consensus estimates.

Net sales for the third quarter fell to EUR11.96 billion from EUR12.48 billion in the same period last year, while business net profit fell 11% to EUR3.20 billion. The company attributed the earnings fall to the loss of exclusivity of its Aubagio drug for relapsing multiple sclerosis.

Write to Adria Calatayud at [e-mail]

(END) Dow Jones Newswires

October 27, 2023 04:28 ET (08:28 GMT)

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