French drug-making group Sanofi has reported that net profit slipped in the third quarter but that its main treatments were doing well and research for new drugs including a dengue fever vaccine looked promising.
But the price of shares in the group plunged by 7.01 percent in initial trading in response to the news that net profit had fallen by 2.4 percent from the equivalent figure last year to 1.19 billion euros ($1.51 billion).
AdvertisementThe company blamed this on the costs of restructuring and on tax charges, but held to its forecasts for the year, and nine-month-figures show a sharp profit rise.
Chief executive Christopher Viehbacher, the target of criticism because he has based himself in Boston in the United States to run the group, said "we are pleased with our performance in the third quarter", and this enabled the group to "confirm out 2014 outlook".
The group's key strategic activities had achieved "over 78 percent of sales and grew 10 percent", he said.
These activities cover treatments such as drugs for diabetes, vaccines, products for the general healthcare of people and animals, the US division for biotechnologies called Genzyme, and activities in emerging markets.
However, the environment for prices for diabetes treatments in the United States had turned "more challenging".
Meanwhile, the prospect for research on new products, including a dengue vaccine, looked "exciting", he said.
Overall sales for the quarter rose by 4.1 percent to 8.78 billion euros, but this fell short of the figure of 8.85 billion euros expected on average by analysts polled by Bloomberg news agency.
The group took a charge of 163 million euros for the costs of restructuring and another of 116 million euros relating to a tax on sales in the United States.
But Sanofi pointed to the net profit excluding such exceptional items, saying that this had risen by 7.8 percent to 1.94 billion euros, above the analysts' forecast of 1.84 billion euros.
Uncertainty over chief executive
Sanofi stood by its own target for net earnings per share, excluding exceptional items, to grow this year by 6.0-8.0 percent, on the basis of constant exchange rates.
In the third quarter, this measure showed an increase of 10.3 percent to 1.47 euros per share. The strongest growth came from the Genzyme subsidiary. For the first nine months of the year, overall net profit totalled 3.05 billion euros, an increase of nearly 15.0 percent from the figure for the same period of last year.
Sales rose by 0.8 percent to 24.7 billion euros, but unfavourable exchange rates had reduced the final figure by 4.2 percentage points, Sanofi said. Sanofi stock, which is a leading component of the French CAC 40 index, was down 7.01 percent to 77.55 euros. The overall index was showing a gain of 0.23 percent.
Analysts at Aurel BGC commented that although the group was holding to its targets, the issue in question was not the results but the fact that the chief executive was based in Boston.
At Bank of America Merrill Lynch, analysts said that the results were in line with targets but they contained cautious comments on diabetes treatments and there was uncertainty about the governance of the group against a background of press reports of talks for Viehbacher to be replaced.