Good third quarter performance - Increase in 2007 full-year earnings growth guidance
PARIS, France, Oct. 31 /CNW Telbec/ -
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Adjusted net income(1) excluding selected items(2):
---------------------------------------------------
2007 Q3: (euro)1,883 million (up 10.8%), i.e. (euro)1.40 per
share (up 11.1%), or
$2,587 million(3) (up 19.5%), i.e. $1.92(3) per share
(up 19.3%)
2007 9 months: (euro)5,532 million (up 6.3%), i.e. (euro)4.10 per share
(up 5.9%), or
$7,435 million(3) (up 14.9%), i.e. $5.50(3) per share
(up 14.3%)
-------------------------------------------------------------------------
In order to give a representation of the underlying economic performance,
we present and explain an adjusted(1) income statement. We also report
adjusted net income and adjusted EPS (excluding selected items) in
U.S. dollars(3) in order to facilitate comparisons with the majority of major
pharmaceutical groups. The consolidated income statement for the first nine
months of 2007 is provided in the Appendices. Net income for the first nine
months of 2007 was (euro)4,510 million, against (euro)3,431 million for the
comparable period of 2006.
2007 third-quarter net sales
- Up 4.4% on a comparable basis (up 1.8% on a reported basis) at
(euro)7,025 million
- Growth of 6.4% in pharmaceuticals net sales after excluding the impact
of generics of Ambien(R) IR in the United States and Eloxatin(R) in
Europe(4), in line with the previous quarter
- Growth of 49.2% in net sales for the vaccines business incorporates the
effect of earlier shipments of influenza vaccines than in 2006
Ongoing cost adaptation measures
- Further reduction in selling and general expenses in the third quarter.
Ratio of selling and general expenses to net sales down to 26.3% for
the 9 months to end September 2007, versus 27.9% for the comparable
period of 2006
Main events of the quarter
- Full effect of the recovery of Plavix(R) in the United States
- Acceleration in sales growth of Plavix(R) in Japan, recent extension of
the product's indication
- Launch of Lantus(R) SoloStar(R) in the United States
- Presentation of the R&D portfolio on September 17
Share repurchase program
- 11.7 million shares repurchased in the third quarter for a total of
(euro)706 million
Guidance on growth in 2007 full-year adjusted EPS excluding selected
items raised from 9% to 10%, based on the same assumptions as previously
used
2007 third-quarter and 9-month net sales
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Unless otherwise indicated, all sales growth figures in this press
release are stated on a comparable basis(1).
-------------------------------------------------------------------------
Sanofi-aventis generated third-quarter net sales of (euro)7,025 million, a
rise of 4.4%. Exchange rate movements had an unfavorable effect of 2.4 points,
and changes in Group structure an unfavorable impact of 0.2 of a point. On a
reported basis, net sales growth was 1.8%.
Net sales for the nine months to end September were (euro)21,141 million,
up 4.5%. Exchange rate movements had an unfavorable effect of 3.7 points, and
changes in Group structure an unfavorable impact of 0.2 of a point. After
taking account of these effects, net sales growth was 0.6% on a reported
basis.
Net sales by business segment - Pharmaceuticals
Third-quarter net sales for the pharmaceuticals business fell by 0.3% to
(euro)6,082 million. Net sales of the top 15 products were up 0.4% at
(euro)4,120 million, representing 67.7% of pharmaceuticals net sales against
67.3% for the comparable period of 2006.
Excluding the impact of the arrival of generics(4) of Ambien(R) IR in the
United States and Eloxatin(R) in Europe, the top 15 products would have
achieved growth of 10.8%.
Net sales for the pharmaceuticals business for the nine months to end
September were (euro)19,012 million, a rise of 2.4%. Net sales of the top 15
products were up 4.4% at (euro)12,897 million, representing 67.8% of
pharmaceuticals net sales, against 66.5% for the comparable period of 2006.
Excluding the impact of the arrival of generics(3) of Ambien(R) IR in the
United States and Eloxatin(R) in Europe, the top 15 products would have
achieved growth of 11.1% to end September.
-------------------------------------------------------------------------
(euro) million 2007 Q3 Change 2007 Change
net sales on a 9-month on a
comparable net sales comparable
basis basis
-------------------------------------------------------------------------
Lovenox(R) 633 +12.6% 1,938 +12.1%
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Plavix(R) 614 +12.9% 1,815 +8.0%
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Lantus(R) 518 +30.8% 1,479 +28.1%
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Taxotere(R) 475 +13.9% 1,398 +11.0%
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Stilnox(R)/Ambien(R)/
Ambien CR(TM) 207 -59.1% 1,065 -20.8%
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Eloxatin(R) 383 -4.5% 1,156 -6.0%
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Copaxone(R) 301 +19.9% 897 +19.3%
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Aprovel(R) 267 +6.0% 803 +7.9%
-------------------------------------------------------------------------
Allegra(R) 159 +7.4% 558 +14.6%
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Tritace(R) 168 -25.3% 546 -21.0%
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Amaryl(R) 94 -8.7% 291 -12.3%
-------------------------------------------------------------------------
Xatral(R) 82 +1.2% 249 -5.0%
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Nasacort(R) 61 +7.0% 227 +16.4%
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Actonel(R) 79 -8.1% 239 -9.1%
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Depakine(R) 79 5.3% 236 4.4%
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TOTAL TOP 15 4,120 +0.4% 12,897 +4.4%
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TOTAL TOP 15 excl.
Eloxatin(R) in Europe
and Ambien(R) IR in the
USA (from April) 3,996 +10.8% 12,500 +11.1%
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Third-quarter net sales of other pharmaceutical products were down 1.7% at
(euro)1,962 million. In the nine months to end September, net sales of other
pharmaceutical products fell by 1.6% to (euro)6,115 million, against
(euro)6,214 million(5) in the comparable period of 2006 (net sales of Ketek(R)
were (euro)46 million, vs. (euro)108 million to end September 2006).
Geographical split of consolidated net sales by product (Top 15)
----------------------------------------------------------------
-------------------------------------------------------------------------
2007 Q3 net sales Europe Change United Change Other Change
((euro) million) on a States on a coun- on a
compa- compa- tries compa-
rable rable rable
basis basis basis
-------------------------------------------------------------------------
Lovenox(R) 181 +9.7% 384 +14.6% 68 +9.7%
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Plavix(R) 428 +9.2% 44 +10.0% 142 +26.8%
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Lantus(R) 160 +21.2% 307 +34.6% 51 +41.7%
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Taxotere(R) 208 +18.9% 176 +8.0% 91 +15.2%
-------------------------------------------------------------------------
Stilnox(R)/
Ambien(R)/
Ambien CR(TM) 22 -8.3% 165 -63.9% 20 -20.0%
-------------------------------------------------------------------------
Eloxatin(R) 89 -38.6% 247 +12.3% 47 +30.6%
-------------------------------------------------------------------------
Copaxone(R) 81 +14.1% 206 +24.1% 14 -
-------------------------------------------------------------------------
Aprovel(R) 209 +5.0% - - 58 +9.4%
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Allegra(R) 11 +10.0% 87 -4.4% 61 +29.8%
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Tritace(R) 116 -3.3% 0 - 52 -49.0%
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Amaryl(R) 26 -31.6% 2 -50.0% 66 +8.2%
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Xatral(R) 40 -11.1% 26 +13.0% 16 +23.1%
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Nasacort(R) 8 +14.3% 47 +9.3% 6 -14.3%
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Actonel(R) 50 -13.8% - - 29 +3.6%
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Depakine(R) 54 +3.8% - - 25 +8.7%
-------------------------------------------------------------------------
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2007 9-month Europe Change United Change Other Change
net sales on a States on a coun- on a
((euro) million) compa- compa- tries compa-
rable rable rable
basis basis basis
-------------------------------------------------------------------------
Lovenox(R) 555 +7.4% 1,184 +14.3% 199 +13.1%
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Plavix(R) 1,282 +6.5% 130 -13.3% 403 +23.6%
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Lantus(R) 459 +18.6% 879 +30.6% 141 +48.4%
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Taxotere(R) 610 +13.8% 522 +5.9% 266 +15.2%
-------------------------------------------------------------------------
Stilnox(R)/
Ambien(R)/
Ambien CR(TM) 65 -9.7% 930 -22.9% 70 +4.5%
-------------------------------------------------------------------------
Eloxatin(R) 295 -33.0% 735 +9.1% 126 +8.6%
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Copaxone(R) 240 +15.9% 613 +21.4% 44 +10.0%
-------------------------------------------------------------------------
Aprovel(R) 627 +5.4% - - 176 +18.1%
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Allegra(R) 46 +7.0% 295 +9.7% 217 +24.0%
-------------------------------------------------------------------------
Tritace(R) 355 -8.5% 1 -91.7% 190 -34.7%
-------------------------------------------------------------------------
Amaryl(R) 90 -36.2% 6 -45.5% 195 +8.3%
-------------------------------------------------------------------------
Xatral(R) 126 -23.6% 79 +27.4% 44 +25.7%
-------------------------------------------------------------------------
Nasacort(R) 34 9.7% 172 +19.4% 21 +5.0%
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Actonel(R) 153 -17.3% - - 86 +10.3%
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Depakine(R) 161 +1.3% - - 75 +11.9%
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Comments by product
-------------------
Net sales of Lovenox(R), the leading low molecular weight heparin on the
market, rose by 12.6% in the quarter to (euro)633 million, boosted by its
increased use in medical prophylaxis in the United States, where the product
reported 14.6% growth in net sales to (euro)384 million. In Europe and the
"Other countries" region, the product posted growth of 9.7%.
In the United States, Lovenox(R) is now being sold in a new indication for
the treatment of patients with acute ST-segment elevation myocardial
infarction (STEMI), further enhancing the product's superiority over
non-fractioned heparins. Application for approval for the same indication was
filed in Europe in the last quarter of 2006.
One-year findings from the ExTRACT-TIMI 25 and STEEPLE studies, presented
during hotline sessions at the European Society of Cardiology (ESC) Congress
in Vienna (Austria) early in September, confirmed a clear net clinical benefit
for Lovenox(R) versus unfractionated heparin in patients with acute ST-segment
elevation myocardial infarction.
Lantus(R), the world's leading insulin brand, continues to record
excellent performances, with net sales up 34.6% in the United States, 21.2% in
Europe and 41.7% in the rest of the world. SoloSTAR(R), a new disposable pen
used to administer Lantus(R) and/or the rapid-acting insulin Apidra(R), is now
available in most major European countries. In France, one of the first
European countries where Lantus(R) SoloSTAR(R) was made available, the
introduction of this new pen led to an acceleration in sales of Lantus(R)
during the third quarter. In the United States, Lantus(R) SoloSTAR(R) -
launched in July - is supporting growth in sales of Lantus(R).
Taxotere(R) posted strong third-quarter growth of 18.9% in Europe and
15.2% in "Other countries". In the United States, net sales of the product
rose by 8.0%.
In early September, efficacy results from a meta-analysis of individual
patient data called DOCMA-LC (DOCetaxel Meta-Analysis in Lung Cancer) were
presented at the 12th World Conference on Lung Cancer in Seoul. This
meta-analysis included 2,867 patients from seven clinical trials, and
demonstrated a significant overall survival benefit for Taxotere(R) over
vinca-alkaloid-based regimens as a first-line treatment for patients with
advanced non small cell lung cancer.
Following a priority review, the U.S. Food and Drug Administration (FDA)
approved Taxotere(R) in association with cisplatin and 5-fluorouracil for the
induction (neo-adjuvant) therapy of patients with locally-advanced squamous
cell carcinoma of the head and neck prior to chemoradiotherapy and surgery. In
October, the Committee for Medicinal Products for Human Use of the European
Medicines Agency has also granted a positive opinion for the use of
Taxotere(R) in Europe in this indication.
Ambien CR(TM) is showing strong resistance to the presence of Ambien(R) IR
generics, with third-quarter net sales reaching $176 million in the United
States. Net sales of Ambien CR(TM) for the nine months to end September 2007
totaled $561 million. As expected, net sales of Ambien(R) IR, which went off
patent in the United States on April 20, 2007, fell significantly in the third
quarter to (euro)35 million, versus (euro)352 million in the comparable period
of 2006.
In Japan, sales of Myslee(R) (not consolidated by sanofi-aventis) rose by
8.7% in the third quarter to (euro)29 million. Over the 9 months to end
September, the product reported 11.2% growth, to (euro)84 million.
In the United States, Eloxatin(R), the market-leading colorectal cancer
treatment as adjuvant and in the metastatic phase, recorded net sales growth
of 12.3% to (euro)247 million. In Europe, the introduction of Eloxatin(R)
generics is continuing, with several countries now affected including Germany,
the United Kingdom, Italy, Spain and France. European sales of the product
fell by 38.6% in the third quarter to (euro)89 million. In the "Other
countries" region, Eloxatin(R) recorded a fine performance, with net sales up
30.6% at (euro)47 million.
Third-quarter net sales of Tritace(R) were down 25.3% at
(euro)168 million, reflecting the introduction of generics of the product in
Canada.
Net sales of Acomplia(R) were (euro)21 million in the third quarter and
(euro)58 million to end September.
Results from clinical trials have shown that Acomplia(R) has a powerful
effect in reducing HbA1c that is comparable with oral anti-diabetics. In
addition, this effect is sustainable and associated with weight loss.
Sanofi-aventis has decided to substantially broaden the ongoing development
program in type 2 diabetes, which will include more than 5,700 patients. The
new development program in diabetes, essentially as an add-on to the main
existing treatments (metformin, sulfonylurea and insulin), includes a
comparative study with sitagliptin, the most recently approved treatment.
Submission in type 2 diabetes is expected in 2009, while submission of a fixed
rimonabant/metformin combination is expected in 2010.
Xyzal(R), a new once-daily prescription oral antihistamine used to treat
internal and external allergies and chronic idiopathic urticaria, was launched
in the United States by sanofi-aventis and UCB at the start of October. The
product, which has been shown to be highly effective in the treatment of
allergy symptoms, is indicated for adults and for children aged six and over.
Worldwide presence(1) of Plavix(R) / Iscover(R)
-----------------------------------------------
-------------------------------------------------------------------------
(euro) million 2007 Q3 Change 2007 Change
on a 9 months on a
comparable comparable
basis basis
-------------------------------------------------------------------------
Europe 450 +6.6% 1,350 +5.4%
-------------------------------------------------------------------------
United States 797 +126.4% 2,159 +23.9%
-------------------------------------------------------------------------
Other countries 213 +23.8% 601 +21.2%
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TOTAL 1,460 +54.3% 4,110 +16.8%
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On June 19, 2007, the U.S. District Court for the Southern District of New
York upheld the validity and enforceability of the U.S. patent covering
clopidogrel bisulfate, the active ingredient of Plavix(R), and issued a
permanent injunction enjoining Apotex from marketing its generic clopidogrel
bisulfate in the United States prior to the expiration of the patent. Apotex
launched a generic clopidogrel bisulfate in August 2006, following which the
U.S. District Court for the Southern District of New York awarded
sanofi-aventis a temporary injunction on August 31, 2006 ordering Apotex to
halt further sales of its generic clopidogrel bisulfate, without however
ordering a recall of products already shipped. The main patent protection for
this product has now been maintained in the United States until November 2011.
In the United States, Plavix(R) recovered its market standing in the third
quarter, having been affected since August 8, 2006 by the launch of a generic
version. Sales of the product reached $1,083 million, compared with $477
million in the third quarter of 2006. In the nine months to end September,
sales of Plavix(R) were up 23.9% at $2,892 million.
In September, the FDA approved a 300mg Plavix(R) tablet that will
facilitate administration of the loading dose for patients with acute coronary
syndrome, as recommended (in association with aspirin) by the American College
of Cardiology and the American Heart Association.
In Europe, third-quarter net sales of Plavix(R) were 6.6% higher at
(euro)450 million, though sales are still affected by parallel imports in
Germany.
In the rest of the world, the product enjoyed robust growth of 23.8%, to
(euro)213 million. In Japan, the two-week limit on prescriptions imposed by
the authorities was lifted in May. This accelerated the pace of growth in net
sales, which reached (euro)17 million for the third quarter, against
(euro)1 million in the third quarter of 2006. Net sales of Plavix(R) in Japan
for the nine months to end September 2007 were (euro)34 million, against
(euro)7 million in the comparable period of 2006. In October, the Japanese
authorities extended the indication of Plavix(R) to patients with acute
coronary syndrome (unstable angina pectoris, non-ST elevation myocardial
infarction) for whom percutaneous coronary intervention (PCI) is being
planned. Plavix(R) is the first drug to be approved for this indication in
Japan.
Worldwide presence(1) of Aprovel(R)/ Avapro(R)/ Karvea(R)
---------------------------------------------------------
-------------------------------------------------------------------------
(euro) million 2007 Q3 Change 2007 Change
on a 9 months on a
comparable comparable
basis basis
-------------------------------------------------------------------------
Europe 229 +6.5% 689 +6.3%
-------------------------------------------------------------------------
United States 128 +8.5% 378 +8.3%
-------------------------------------------------------------------------
Other countries 105 +12.9% 304 +17.4%
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TOTAL 462 +8.5% 1,371 +9.2%
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Third-quarter worldwide sales of Aprovel(R)/Avapro(R)/Karvea(R) were up
8.5% at (euro)462 million.
In the United States, the product achieved third-quarter net sales growth
of 8.5%.
On April 18, the Cardio-Renal Advisory Committee of the FDA recommended
approval of Avalide(R) as an initial treatment for hypertension. Avalide(R) is
a fixed-dose combination of irbesartan and hydrochlorothiazide that is
currently approved for the treatment of hypertension in patients with blood
pressure uncontrolled on monotherapy. If approved, the new indication for
Avalide(R) would be the first-line treatment for hypertension in patients who
are unlikely to obtain their blood pressure goals on monotherapy.
Net sales by business segment - Human Vaccines
Third-quarter consolidated net sales for the Human Vaccines business were
up 49.2% at (euro)943 million.
The period was boosted by earlier shipments of influenza vaccines than in
2006, when a substantial proportion of shipments were postponed to the final
quarter. As a result, net sales of influenza vaccines rose by 117.3% in the
quarter to (euro)365 million.
Adacel(TM) (adult and adolescent tetanus-diphtheria-pertussis booster) and
Menactra(R) also performed very strongly in the third quarter, with net sales
up 75.9% at (euro)77 million and up 124.9% at (euro)165 million respectively.
In October, the FDA extended the license for Menactra(R) to children aged
2 through 10 years. The initial license, granted in 2005, was for vaccination
of adolescents and adults aged 11 through 55 years.
Consolidated net sales for the Human Vaccines business in the nine months
to end September were up 28.3% at (euro)2,129 million. Over the period, net
sales of Menactra(R) rose by 89.0% to (euro)344 million, and net sales of
Adacel(TM) were 69.2% higher at (euro)195 million.
-------------------------------------------------------------------------
(euro) million 2007 Q3 Change 2007 Change
net sales on a 9-month on a
comparable net sales comparable
basis basis
-------------------------------------------------------------------------
Polio/Pertussis/Hib
Vaccines 147 -14.0% 518 +6.6%
-------------------------------------------------------------------------
Adult Booster Vaccines 113 +43.0% 332 +35.5%
-------------------------------------------------------------------------
Meningitis/Pneumonia
Vaccines 190 +95.9% 397 +66.8%
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Travel & Other Endemics
Vaccines 88 +11.4% 251 +13.1%
-------------------------------------------------------------------------
Influenza Vaccines 365 +117.3% 521 +37.5%
-------------------------------------------------------------------------
Other vaccines 40 +5.3% 110 +22.2%
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TOTAL 943 +49.2% 2,129 +28.3%
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Third-quarter sales at Sanofi Pasteur MSD, the joint venture with Merck &
Co in Europe, advanced by 79.2% on a reported basis to (euro)324 million,
buoyed by the success of Gardasil(R) (net sales of (euro)101 million).
Gardasil(R), the first vaccine against papillomavirus infections (which
cause cervical cancer) is marketed by Sanofi Pasteur MSD in 19 European
countries. To date, Gardasil(R) is funding in 9 European countries.
For the nine months to end September, Sanofi Pasteur MSD reported net
sales of (euro)669 million, an increase of 43.1% on a reported basis. Net
sales of Gardasil(R) totaled (euro)182 million over this period. Sanofi
Pasteur MSD sales are not consolidated by sanofi-aventis.
Net sales by geographic region
-------------------------------------------------------------------------
(euro) million 2007 Q3 Change 2007 Change
net sales on a 9-month on a
comparable net sales comparable
basis basis
-------------------------------------------------------------------------
Europe 2,978 +1.0% 9,128 -0.3%
-------------------------------------------------------------------------
United States 2,449 +6.1% 7,293 +8.1%
-------------------------------------------------------------------------
Other countries 1,598 +8.5% 4,720 +9.3%
-------------------------------------------------------------------------
TOTAL 7,025 +4.4% 21,141 +4.5%
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Europe reported slight growth in the third quarter, but continues to be
affected by a decline in net sales in France and Germany. In the nine months
to end September, net sales fell by 0.3%, with the introduction of generics of
Eloxatin(R) paring approximately 1.6% off sales growth for the period.
In the United States, third-quarter net sales rose by 6.1% despite the
full effect of generic versions of Ambien(R) IR, which went off patent on
April 20, 2006. Excluding the impact of Ambien(R) IR generics, net sales
growth in the United States was 23.4%, thanks largely to a very fine
performance from the Human Vaccines business.
In the nine months to end September, net sales rose by 8.1%, or by 18.2%
excluding the impact of Ambien(R) IR generics from April.
In the "Other countries" region, third-quarter net sales were up 8.5%,
driven by Latin America, Japan, the Middle East and Africa. Japan performed
particularly well in the third quarter, posting double-digit growth thanks to
an acceleration in sales growth for Plavix(R). In the nine months to end
September, net sales in the "Other Countries" region rose by 9.3%.
Adjusted consolidated income statement
The adjusted consolidated income statement is presented in Appendix 3.
Refer to Appendix 1 for a definition of "adjusted net income", and to
Appendix 4 for a reconciliation of the consolidated income statement to the
adjusted consolidated income statement.
Third quarter of 2007
---------------------
Sanofi-aventis net sales for the third quarter of 2007 rose by 1.8% on a
reported basis to (euro)7,025 million.
Gross profit was (euro)5,420 million. The gross margin ratio was 77.2%,
against 76.8% for the third quarter of 2006. Royalty income rose by 23.7%,
mainly due to the sharp rise in net sales of Plavix(R) in the United States
versus the third quarter of 2006 (when the product faced competition from a
generic version), and despite the discontinuation of royalties from fipronil.
The ratio of cost of sales to net sales increased from 26.7% to 27.0%, mainly
as a result of the introduction of generics of Ambien(R) IR in the United
States.
Measures initiated in France, Germany and the United States during 2006,
combined with the ongoing cost containment policy, led to a further decline in
the ratio of selling and general and expenses to net sales to 25.0%, against
26.2% in the comparable period of 2006. In absolute terms, selling and general
expenses were 2.9% lower than in the third quarter of 2006 at
(euro)1,754 million.
Operating income - current(1) rose by 5.2%, and represented 37.1% of net
sales compared with 36.0% in the third quarter of 2006.
Net financial expenses were (euro)40 million, against (euro)53 million in
the comparable period of 2006. Interest expense on debt was (euro)64 million,
compared with (euro)92 million in the third quarter of 2006.
Income tax expense was (euro)818 million, versus (euro)743 million in the
third quarter of 2006. The reported tax rate was 31.8%, against 30.6% for the
comparable period of 2006. Tax rate cuts due to come into effect from 2008 in
Germany, Spain and the United Kingdom led to the recognition of a
(euro)51 million expense on a net deferred tax asset, while (euro)21 million
of net provisions were released as a result of the settlement of various tax
disputes. The effective tax rate for the period was 30.7%.
Strong growth in sales of Plavix(R) in the United States resulted in an
83.6% increase in the share of profits of associates to (euro)213 million
((euro)116 million in the third quarter of 2006). The share of after-tax
profits from territories managed by BMS (primarily the United States) under
the Plavix(R) and Avapro(R) alliance was (euro)141 million, versus
(euro)56 million in the third quarter of 2006. The contributions from Merial
and Sanofi Pasteur MSD also increased relative to the third quarter of 2006.
Minority interests totaled (euro)111 million, compared with
(euro)100 million in the third quarter of 2006. This line includes the share
of pre-tax profits paid to BMS from territories managed by sanofi-aventis
((euro)107 million, compared with (euro)95 million in the third quarter of
2006).
Adjusted net income was up 9.1% at (euro)1,853 million, while adjusted
earnings per share (adjusted EPS) was (euro)1.37 (8.7% up on the 2006
third-quarter figure of (euro)1.26), based on an average number of shares
outstanding of 1,349.3 million in the third quarter of 2007 and
1,348.0 million in the third quarter of 2006.
Excluding selected items (see Appendix 5), adjusted net income was
(euro)1,883 million (10.8% up on the 2006 third-quarter figure of
(euro)1,699 million), and adjusted EPS was (euro)1.40 (11.1% up on the 2006
third-quarter figure of (euro)1.26).
Expressed in U.S. dollars(3) and excluding selected items, adjusted net
income was $2,587 million (19.5% up on the third quarter of 2006), and
adjusted EPS was $1.92 (19.3% up on the third quarter of 2006).
9 months to end September 2007
------------------------------
In the nine months to end September 2007, net sales generated by
sanofi-aventis totaled (euro)21,141 million, a rise of 0.6% on a reported
basis.
Gross profit was (euro)16,379 million, an increase of 0.4%. The gross
margin ratio was 77.5%, versus 77.6% for the comparable period of 2006. The
ratio of cost of sales to net sales was stable year-on-year, with the impact
of generic competition for Ambien(R) IR partly offset by a better product mix.
Other revenues, at (euro)845 million, were down on the 2006 9-month figure
((euro)888 million), due largely to the discontinuation of royalty income on
fipronil.
Research and development expenses rose by 1.5% (4.4% excluding the effect
of exchange rates).
Over the first nine months of 2007, the cost adaptation measures initiated
in 2006 helped to reduce the ratio of selling and general expenses to net
sales to 26.3%, 1.6 points lower than in the comparable period of 2006.
Selling and general expenses for the nine-month period were
(euro)5,558 million, a reduction of 5.3%, with selling expenses and general
expenses falling in equal proportions.
Other current operating income (net of expenses) totaled
(euro)200 million, versus (euro)236 million in the comparable period of 2006,
and included an expense of (euro)61 million ((euro)42 million after tax) on
the harmonization of welfare and healthcare plans for the Group's retirees.
Operating income - current(1) rose by 4.1%, and represented 36.2% of net
sales compared with 35.0% in the first nine months of 2006.
A restructuring charge of (euro)50 million ((euro)35 million after tax)
has been recognized in connection with the ongoing adaptation plan initiated
in France in 2006.
In the comparable period of 2006, the financial statements included gains
on disposal of (euro)553 million, mainly on the sale of the Exubera(R) rights
((euro)460 million, or (euro)384 million after tax) and the sale of the
residual stake in the Animal Nutrition business ((euro)45 million, or
(euro)31 million after tax).
Net financial expense was (euro)111 million, against (euro)146 million in
the comparable period of 2006. Interest expense on debt was (euro)176 million,
compared with (euro)250 million in the nine months to end September 2006.
Income tax expense totaled (euro)2,108 million, versus (euro)2,282 million
in the nine months to end September 2006. The reported tax rate was 28.1%,
compared with 29.5% in the nine months to end September 2006. The 2007 figure
includes a net gain of (euro)244 million relating to movements in provisions
and tax risks/settlements of tax disputes, and a deferred tax expense of
(euro)51m related to cuts in tax rates in Germany, Spain and the United
Kingdom. The 2006 figure was influenced by the low income tax charge arising
on the Exubera(R) gain. The effective tax rate for the first nine months of
2007 was 30.7%.
The share of profits of associates was (euro)582 million, against
(euro)509 million in the nine months to end September 2006. The share of
after-tax profits from territories managed by BMS under the Plavix(R) and
Avapro(R) alliance was (euro)376 million, versus (euro)308 million in the nine
months to end September 2006. There was a decrease in the contribution from
Sanofi-Pasteur MSD, currently in the Gardasil(R) launch phase, while there was
an increase in the contribution from Merial.
Minority interests were (euro)322 million, versus (euro)290 million in the
nine months to end September 2006. This line includes the share of pre-tax
profits paid to BMS from territories managed by sanofi-aventis
((euro)307 million, versus (euro)277 million in the nine months to end
September 2006).
Adjusted net income fell by 0.3% to (euro)5,648 million, while adjusted
earnings per share (adjusted EPS) was (euro)4.18 (0.7% down on the 2006
9-month figure of (euro)4.21), based on an average number of shares
outstanding of 1,350.8 million in the nine months to end September 2007 and
1,346.1 million in the nine months to end September 2006.
Excluding selected items (see Appendix 5), adjusted net income was
(euro)5,532 million (6.3% up on the 2006 9-month figure of
(euro)5,203 million); and adjusted EPS was (euro)4.10 (5.9% up on the 2006
9-month figure of (euro)3.87).
Expressed in U.S. dollars(3) and excluding selected items, adjusted net
income was (euro)7,435 million (14.9% up on the 2006 9-month figure), and
adjusted EPS was (euro)5.50 (14.3% up on the 2006 9-month figure).
2007 Guidance
Barring major adverse events (in particular, major adverse events relating
to Lovenox(R) in the United States), the Group expects 2007 full-year growth
in adjusted EPS excluding selected items(2)/(6) to be around 10%, calculated
using an exchange rate of (euro)1 = $1.25, despite the end of patent
protection for Ambien(R) IR in the United States in April and the arrival of
generic competition for Eloxatin(R) in Europe. Sensitivity to the euro/dollar
exchange rate is estimated at 0.6% of growth for a 1-cent movement in the
exchange rate.
Share Repurchase Program
Under the current share repurchase program, which is capped at
(euro)3 billion and expires on the date of the next Annual General Meeting of
the shareholders (May 14, 2008), the company acquired 11,734,000 of its own
shares during the third quarter for a total of (euro)706 million, at an
average price of (euro)60.11 per share.
Consolidated net debt, which was (euro)5.8 billion at end December 2006,
totaled (euro)4.5 billion as of September 30, 2007.
Board of Directors
Mr Serge Kampf has expressed his wish to resign from the Board for
personal reasons with effect as of the Board meeting of October 30, 2007. His
term was scheduled to expire at the next Shareholders Meeting in May 2008.
Forward-Looking Statements
This press release contains forward-looking statements as defined in the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
are statements that are not historical facts. These statements include
financial projections and estimates and their underlying assumptions,
statements regarding plans, objectives, intentions and expectations with
respect to future events, operations, products and services, and statements
regarding future performance. Forward-looking statements are generally
identified by the words "expect," "anticipates," "believes," "intends,"
"estimates," "plans" and similar expressions. Although sanofi-aventis
management believes that the expectations reflected in such forward-looking
statements are reasonable, investors are cautioned that forward-looking
information and statements are subject to various risks and uncertainties,
many of which are difficult to predict and generally beyond the control of
sanofi-aventis, that could cause actual results and developments to differ
materially from those expressed in, or implied or projected by, the
forward-looking information and statements. These risks and uncertainties
include those discussed or identified in the public filings with the SEC and
the AMF made by sanofi-aventis, including those listed under "Risk Factors"
and "Cautionary Statement Regarding Forward-Looking Statements" in the
sanofi-aventis annual report on Form 20-F for the year ended December 31,
2006. Other than as required by applicable law, sanofi-aventis does not
undertake any obligation to update or revise any forward-looking information
or statements.
Recent Events
-------------
-------------------------------------------------------------------------
September 2, 2007 Announcement of one-year findings from the
ExTRACT-TIMI 25 and STEEPLE studies confirming a
clear net clinical benefit for Lovenox(R) versus
unfractionated heparin in patients with acute
ST-segment elevation myocardial infarction.
-------------------------------------------------------------------------
September 4, 2007 Announcement that a meta-analysis had demonstrated a
significant overall survival benefit for Taxotere(R)
over vinca-alkaloid-based regimens as a first-line
treatment for patients with advanced non small cell
lung cancer.
-------------------------------------------------------------------------
September 5, 2007 Publication in the New England Journal of Medicine
of results from the EURIDIS/ADONIS efficacy trials
of dronedarone.
-------------------------------------------------------------------------
September 10, 2007 Announcement of a civil settlement with the
U.S. Department of Justice on claims relating to the
average wholesale price of Anzemet(R).
-------------------------------------------------------------------------
September 14, 2007 Initiation of a research collaboration in China in
the cancer stem-cell field.
-------------------------------------------------------------------------
September 17, 2007 R&D day: announcement of important clinical trial
results, and of around thirty potential filings for
approval by end 2010.
-------------------------------------------------------------------------
September 19, 2007 Presentation to the EASD of the first direct proof
of the significant effect of Acomplia(R) in reducing
intra-abdominal adipose tissue as measured by
tomodensitometry.
-------------------------------------------------------------------------
October 1, 2007 Announcement that the FDA had approved Taxotere(R)
for the treatment of locally-advanced head and neck
cancer prior to chemoradiotherapy and surgery.
-------------------------------------------------------------------------
October 2, 2007 Announcement of the launch of Xyzal(R) on the
U.S. market by UCB and sanofi-aventis.
-------------------------------------------------------------------------
October 18, 2007 Announcement that the FDA had approved Menactra(R)
for children aged 2 through 10 years.
-------------------------------------------------------------------------
October 22, 2007 Announcement of extension to the indications of
Plavix(R) in Japan to patients with acute coronary
syndrome for whom percutaneous coronary intervention
is planned
-------------------------------------------------------------------------
October 22, 2007 Announcement of positive opinion from the Committee
for Medicinal Products for Human Use recommending
approval of Taxotere(R) in the European Union as an
induction treatment for locally advanced head and
neck cancer.
-------------------------------------------------------------------------
October 24, 2007 Announcement of results from a new study that showed
patients with chronic insomnia who were treated with
Ambien CR(R) experienced significant improvements in
two key parameters of work performance
-------------------------------------------------------------------------
October 24, 2007 Announcement of publication in the New England
Journal of Medicine of results of two clinical
studies on Taxotere(R) , TAX 324 and TAX323
-------------------------------------------------------------------------
Future Events
-------------
-------------------------------------------------------------------------
December 10, 2007 Presentation of the results of the TREK
dose-response study (AVE5026) to the American
Society of Hematology in Atlanta.
-------------------------------------------------------------------------
Financial Timetable
-------------------
-------------------------------------------------------------------------
February 12, 2008 2007 results - Analyst/Investor meeting in Paris
-------------------------------------------------------------------------
April 30, 2008 2008 first-quarter net sales and results
-------------------------------------------------------------------------
May 14, 2008 Shareholders' Annual General Meeting
-------------------------------------------------------------------------
July 31, 2008 2008 second-quarter net sales and results
-------------------------------------------------------------------------
October 31, 2008 2008 third-quarter net sales and results
-------------------------------------------------------------------------
(1) See Appendix 1 for a definition of financial indicators
(2) See Appendix 5
(3) U.S. dollar figures obtained by translating euro-denominated figures
at the average exchange rate for the period: 1.374 for Q3 2007
(1.274 for Q3 2006) and 1.344 for 9 months to end September 2007
(1.244 for 9 months to end September 2006)
(4) Excluding net sales of Ambien(R) IR in the United States (from April)
and net sales of Eloxatin(R) in Europe
(5) Comparable net sales
(6) Adjusted EPS excluding selected items for the year ended December 31,
2006 was (euro)4.88.
Appendices
List of appendices
------------------
Appendix 1: Explanatory Notes/Financial Indicators
Appendix 2: 2007 third-quarter, 9-month, first-quarter and second-quarter
net sales by product
Appendix 3: 2007 third-quarter and 9-month adjusted consolidated income
statements
Appendix 4: 2007 third-quarter and 9-month consolidated income statement
and reconciliation to adjusted consolidated income statement
Appendix 5: Trends in selected items in the adjusted income statement
Appendix 1: Explanatory Notes/Financial Indicators
--------------------------------------------------
Comparable net sales
When we refer to the change in our sales on a "comparable" basis, we mean
that we exclude the impact of exchange rate movements and changes in Group
structure (acquisitions and divestments of interests in entities and rights to
products, and changes in consolidation method for consolidated entities).
We exclude the impact of exchange rates by recalculating sales for the
prior period on the basis of exchange rates used in the current period. We
exclude the impact of acquisitions by including sales from the acquired entity
or product rights for a portion of the prior period equal to the portion of
the current period during which we owned them, based on sales information we
receive from the party from whom we make the acquisition.
Similarly, we exclude sales in the relevant portion of the prior period
when we have sold an entity or rights to a product.
For a change in consolidation method, the prior period is recalculated on
the basis of the method used for the current period.
Reconciliation of 2006 third-quarter/9-month net sales to 2006
third-quarter/9-month comparable net sales:
-------------------------------------------------------------------------
(euro) million 2006: Q3
-------------------------------------------------------------------------
2006 third-quarter net sales 6,901
-------------------------------------------------------------------------
Impact of changes in Group structure (14)
-------------------------------------------------------------------------
Impact of exchange rates (156)
-------------------------------------------------------------------------
2006 third-quarter comparable net sales 6,731
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(euro) million 2006: 9 months
-------------------------------------------------------------------------
2006 9-month net sales 21,017
-------------------------------------------------------------------------
Impact of changes in Group structure (44)
-------------------------------------------------------------------------
Impact of exchange rates (748)
-------------------------------------------------------------------------
2006 9-month comparable net sales 20,225
-------------------------------------------------------------------------
Worldwide presence of a product
When we refer to the "worldwide presence" of a product, we mean our
consolidated net sales of that product, minus sales of the product to our
alliance partners plus non-consolidated sales made through our alliances with
Bristol-Myers Squibb on Plavix(R)/Iscover(R) (clopidogrel) and
Aprovel(R)/Avapro(R)/Karvea(R) (irbesartan), based on information provided to
us by our alliance partner.
Operating income - current
We define "operating income - current" as operating income before
restructuring, impairment of property, plant and equipment and intangibles,
gains/losses on disposals, and litigation.
Adjusted net income
We define "adjusted net income" as accounting net income after minority
interests adjusted to exclude (i) the material impacts of the application of
purchase accounting to acquisitions and (ii) acquisition-related integration
and restructuring costs. We believe that eliminating these impacts from net
income gives investors a better understanding of the underlying economic
performance of the combined Group.
The material impacts of the application of purchase accounting to
acquisitions, primarily the acquisition of Aventis, are as follows:
- charges arising from the remeasurement of inventories at fair value,
net of tax;
- amortization/impairment expense generated by the remeasurement of
intangible assets, net of tax;
- any impairment of goodwill.
We also exclude from adjusted net income any integration and restructuring
costs (net of tax) that are specific to the acquisition of Aventis by
sanofi-aventis.
-------------------------------------------------------------------------
(euro) million 2007 Q3 2007 Q3 2007 2007
consoli- adjusted 9-month adjusted
dated consoli- consoli- consoli-
financial dated dated dated
statements financial financial financial
(unaudited) statements statements statements
(unaudited) 9-month
-------------------------------------------------------------------------
Net sales 7,025 7,025 21,141 21,141
-------------------------------------------------------------------------
Net income after minority
interests 1,845 1,853 4,510 5,648
-------------------------------------------------------------------------
Basic earnings per share 1.37 1.37 3.34 4.18
-------------------------------------------------------------------------
Appendix 2: 2007 third-quarter and 9-month net sales by product
---------------------------------------------------------------
2007 third-quarter net sales by product:
-------------------------------------------------------------------------
(euro) million 2007 Q3 2006 Q3 2006 Q3
net sales comparable reported
net sales net sales
-------------------------------------------------------------------------
Lovenox(R) 633 562 583
-------------------------------------------------------------------------
Plavix(R) 614 544 543
-------------------------------------------------------------------------
Lantus(R) 518 396 412
-------------------------------------------------------------------------
Taxotere(R) 475 417 429
-------------------------------------------------------------------------
Stilnox(R)/Ambien(R)/Ambien CR(TM) 207 506 538
-------------------------------------------------------------------------
Eloxatin(R) 383 401 417
-------------------------------------------------------------------------
Copaxone(R) 301 251 262
-------------------------------------------------------------------------
Aprovel(R) 267 252 252
-------------------------------------------------------------------------
Allegra(R) 159 148 156
-------------------------------------------------------------------------
Tritace(R) 168 225 223
-------------------------------------------------------------------------
Amaryl(R) 94 103 106
-------------------------------------------------------------------------
Xatral(R) 82 81 83
-------------------------------------------------------------------------
Nasacort(R) 61 57 60
-------------------------------------------------------------------------
Actonel(R) 79 86 84
-------------------------------------------------------------------------
Depakine(R) 79 75 73
-------------------------------------------------------------------------
TOTAL 4,120 4,104 4,221
-------------------------------------------------------------------------
Other products 1,962 1,995 2,033
-------------------------------------------------------------------------
TOTAL Pharmaceuticals 6,082 6,099 6,254
-------------------------------------------------------------------------
Vaccines 943 632 647
-------------------------------------------------------------------------
TOTAL Net sales 7,025 6,731 6,901
-------------------------------------------------------------------------
2007 9-month net sales by product:
-------------------------------------------------------------------------
(euro) million 2007 2006 2006
9-month 9-month 9-month
net sales comparable reported
net sales net sales
-------------------------------------------------------------------------
Lovenox(R) 1,938 1,729 1,821
-------------------------------------------------------------------------
Plavix(R) 1,815 1,680 1,688
-------------------------------------------------------------------------
Lantus(R) 1,479 1,155 1,215
-------------------------------------------------------------------------
Taxotere(R) 1,398 1,260 1,315
-------------------------------------------------------------------------
Stilnox(R)/Ambien(R)/Ambien CR(TM) 1,065 1,345 1,446
-------------------------------------------------------------------------
Eloxatin(R) 1,156 1,230 1,291
-------------------------------------------------------------------------
Copaxone(R) 897 752 796
-------------------------------------------------------------------------
Aprovel(R) 803 744 750
-------------------------------------------------------------------------
Allegra(R) 558 487 525
-------------------------------------------------------------------------
Tritace(R) 546 691 706
-------------------------------------------------------------------------
Amaryl(R) 291 332 346
-------------------------------------------------------------------------
Xatral(R) 249 262 269
-------------------------------------------------------------------------
Nasacort(R) 227 195 209
-------------------------------------------------------------------------
Actonel(R) 239 263 264
-------------------------------------------------------------------------
Depakine(R) 236 226 227
-------------------------------------------------------------------------
TOTAL 12,897 12,351 12,868
-------------------------------------------------------------------------
Other products 6,115 6,214 6,422
-------------------------------------------------------------------------
TOTAL Pharmaceuticals 19,012 18,565 19,290
-------------------------------------------------------------------------
Vaccines 2,129 1,660 1,727
-------------------------------------------------------------------------
TOTAL Net sales 21,141 20,225 21,017
-------------------------------------------------------------------------
2007 second-quarter net sales by product:
-------------------------------------------------------------------------
(euro) million 2007 Q2 2006 Q2 2006 Q2
net sales comparable reported
net sales net sales
-------------------------------------------------------------------------
Lovenox(R) 671 581 614
-------------------------------------------------------------------------
Plavix(R) 632 561 565
-------------------------------------------------------------------------
Lantus(R) 503 399 421
-------------------------------------------------------------------------
Taxotere(R) 474 435 456
-------------------------------------------------------------------------
Stilnox(R)/Ambien(R)/Ambien CR(TM) 252 433 467
-------------------------------------------------------------------------
Eloxatin(R) 380 423 445
-------------------------------------------------------------------------
Copaxone(R) 307 255 271
-------------------------------------------------------------------------
Aprovel(R) 272 247 250
-------------------------------------------------------------------------
Allegra(R) 198 174 189
-------------------------------------------------------------------------
Tritace(R) 167 241 248
-------------------------------------------------------------------------
Amaryl(R) 103 113 119
-------------------------------------------------------------------------
Xatral(R) 85 90 92
-------------------------------------------------------------------------
Nasacort(R) 87 73 78
-------------------------------------------------------------------------
Actonel(R) 82 90 91
-------------------------------------------------------------------------
Depakine(R) 81 75 76
-------------------------------------------------------------------------
TOTAL 4,294 4,190 4,382
-------------------------------------------------------------------------
Other products 2,026 2,,054 2,131
-------------------------------------------------------------------------
TOTAL Pharmaceuticals 6,320 6,244 6,513
-------------------------------------------------------------------------
Vaccines 619 539 568
-------------------------------------------------------------------------
TOTAL Net sales 6,939 6,783 7,081
-------------------------------------------------------------------------
2007 first-quarter net sales by product:
-------------------------------------------------------------------------
(euro) million 2007 Q1 2006 Q1 2006 Q1
net sales comparable reported
net sales net sales
-------------------------------------------------------------------------
Lovenox(R) 634 586 624
-------------------------------------------------------------------------
Plavix(R) 569 575 580
-------------------------------------------------------------------------
Lantus(R) 458 360 382
-------------------------------------------------------------------------
Taxotere(R) 449 408 430
-------------------------------------------------------------------------
Stilnox(R)/Ambien(R)/Ambien CR(TM) 606 406 441
-------------------------------------------------------------------------
Eloxatin(R) 393 406 429
-------------------------------------------------------------------------
Copaxone(R) 289 246 263
-------------------------------------------------------------------------
Aprovel(R) 264 245 248
-------------------------------------------------------------------------
Allegra(R) 201 165 180
-------------------------------------------------------------------------
Tritace(R) 211 225 235
-------------------------------------------------------------------------
Amaryl(R) 94 116 121
-------------------------------------------------------------------------
Xatral(R) 82 91 94
-------------------------------------------------------------------------
Nasacort(R) 79 65 71
-------------------------------------------------------------------------
Actonel(R) 78 87 89
-------------------------------------------------------------------------
Depakine(R) 76 76 78
-------------------------------------------------------------------------
TOTAL 4,483 4,057 4,265
-------------------------------------------------------------------------
Other products 2,127 2,,165 2,258
-------------------------------------------------------------------------
TOTAL Pharmaceuticals 6,610 6,222 6,523
-------------------------------------------------------------------------
Vaccines 567 489 512
-------------------------------------------------------------------------
TOTAL Net sales 7,177 6,711 7,035
-------------------------------------------------------------------------
Appendix 3: 2007 third-quarter and 9-month adjusted consolidated income
-----------------------------------------------------------------------
statements
----------
2007 third-quarter adjusted consolidated income statement (unaudited)
------------------------------------------------------------------------
(euro) million Q3 2007 as % Q3 2006 as % %
adjusted of net adjusted of net change
conso- sales conso- sales
lidated lidated
income income
statement statement
------------------------------------------------------------------------
Net sales 7,025 100.0% 6,901 100.0% +1.8%
-------------------------------------------------------------------------
Other revenues 298 4.2% 241 3.5% +23.7%
-------------------------------------------------------------------------
Cost of sales (1,903) (27.0%) (1,840) (26.7%) +3.4%
-------------------------------------------------------------------------
Gross profit 5,420 77.2% 5,302 76.8% +2.2%
-------------------------------------------------------------------------
Research and development
expenses (1,084) (15.4%) (1,075) (15.6%) +0.8%
-------------------------------------------------------------------------
Selling and general
expenses (1,754) (25.0%) (1,806) (26.2%) -2.9%
-------------------------------------------------------------------------
Other current operating
income 110 - 122 - -
-------------------------------------------------------------------------
Other current operating
expenses (52) - (26) - -
-------------------------------------------------------------------------
Amortization of
intangibles (31) - (36) - -
-------------------------------------------------------------------------
Operating income -
current(*) 2,609 37.1% 2,481 36.0% 5.2%
-------------------------------------------------------------------------
Restructuring costs - - - - -
-------------------------------------------------------------------------
Impairment of PP&E and
intangibles - - (2) - -
-------------------------------------------------------------------------
Gain/loss on disposals,
and litigation - - - - -
-------------------------------------------------------------------------
Operating income 2,609 37.1% 2,479 35.9% +5.2%
-------------------------------------------------------------------------
Financial expenses (86) - (119) - -27.7%
-------------------------------------------------------------------------
Financial income 46 - 66 - -30.3%
-------------------------------------------------------------------------
Income before tax and
associates 2,569 36.6% 2,426 35.2% +5.9%
-------------------------------------------------------------------------
Income tax expense (818) (11.6%) (743) (10.9%) +10.1%
-------------------------------------------------------------------------
Reported tax rate 31.8% - 30.6% - -
-------------------------------------------------------------------------
Share of profit/loss of
associates 213 - 116 - +83.6%
-------------------------------------------------------------------------
Consolidated net income 1,964 28.0% 1,799 26.1% +9.2%
-------------------------------------------------------------------------
Minority interests 111 - 100 - +11.0%
-------------------------------------------------------------------------
Net income after minority
interests 1,853 26.4% 1,699 24.6% +9.1%
-------------------------------------------------------------------------
Average number of shares
outstanding (million) 1,349.3 1,348.0
-------------------------------------------------------------------------
Earnings per share
(in euros) 1.37 1.26 +8.7%
-------------------------------------------------------------------------
(*) Operating income before restructuring, impairment of PP&E and
intangibles, gains/losses on disposals, and litigation
2007 9-month adjusted consolidated income statement (unaudited)
-------------------------------------------------------------------------
(euro) million 2007 as % 2006 as % %
9-month of net 9-month of net change
adjusted sales adjusted sales
conso- conso-
lidated lidated
income income
statement statement
-------------------------------------------------------------------------
Net sales 21,141 100.0% 21,017 100.0% 0.6%
-------------------------------------------------------------------------
Other revenues 845 4.0% 888 4.2% -4.8%
-------------------------------------------------------------------------
Cost of sales (5,607) (26.5%) (5,598) (26.6%) +0.2%
-------------------------------------------------------------------------
Gross profit 16,379 77.5% 16,307 77.6% +0.4%
-------------------------------------------------------------------------
Research and
development expenses (3,266) (15.4%) (3,219) (15.3%) +1.5%
-------------------------------------------------------------------------
Selling and general
expenses (5,558) (26.3%) (5,867) (27.9%) -5.3%
-------------------------------------------------------------------------
Other current
operating income 388 - 322 - -
-------------------------------------------------------------------------
Other current
operating expenses (188) - (86) - -
-------------------------------------------------------------------------
Amortization of
intangibles (98) - (102) - -
-------------------------------------------------------------------------
Operating income -
current(*) 7,657 36.2% 7,355 35.0% +4.1%
-------------------------------------------------------------------------
Restructuring costs (50) - - - -
-------------------------------------------------------------------------
Impairment of PP&E
and intangibles - - (3) - -
-------------------------------------------------------------------------
Gain/loss on disposals,
and litigation - - 520 - -
-------------------------------------------------------------------------
Operating income 7,607 36.0% 7,872 37.5% -3.4%
-------------------------------------------------------------------------
Financial expenses (256) - (399) - -35.8%
-------------------------------------------------------------------------
Financial income 145 - 253 - -42.7%
-------------------------------------------------------------------------
Income before tax and
associates 7,496 35.5% 7,726 36.8% -3.0%
-------------------------------------------------------------------------
Income tax expense (2,108) (10.1%) (2,282) (10.9%) -7.6%
-------------------------------------------------------------------------
Reported tax rate 28.1% - 29.5% - -
-------------------------------------------------------------------------
Share of profit/loss
of associates 582 - 509 - +14.3%
-------------------------------------------------------------------------
Consolidated net income 5,970 28.2% 5,953 28.3% +0.3%
-------------------------------------------------------------------------
Minority interests 322 - 290 - +11.0%
-------------------------------------------------------------------------
Net income after minority
interests 5,648 26.7% 5,663 26.9% -0.3%
-------------------------------------------------------------------------
Average number of shares
outstanding (million) 1,350.8 1,346.1
-------------------------------------------------------------------------
Earnings per share
(in euros) 4.18 4.21 -0.7%
-------------------------------------------------------------------------
(*) Operating income before restructuring, impairment of PP&E and
intangibles, gains/losses on disposals, and litigation
Appendix 4: 2007 third-quarter and 9-month reconciliation of consolidated
-------------------------------------------------------------------------
income statement to adjusted consolidated income statement
----------------------------------------------------------
2007 third-quarter reconciliation of consolidated income statement to
adjusted consolidated income statement
The adjustments to the income statement reflect the elimination of
material impacts of the application of purchase accounting to acquisitions,
primarily the acquisition of Aventis, amounting to (euro)8 million net of
deferred taxes (with no cash impact for the Group).
-------------------------------------------------------------------------
(euro) million 2007 Q3 Adjust- 2007 Q3
(unaudited) consoli- ments adjusted
dated consoli-
dated
-------------------------------------------------------------------------
Net sales 7,025 7,025
-------------------------------------------------------------------------
Other revenues 298 298
-------------------------------------------------------------------------
Cost of sales (1,903) (1,903)
-------------------------------------------------------------------------
Gross profit 5,420 5,420
-------------------------------------------------------------------------
Research and development expenses (1,084) (1,084)
-------------------------------------------------------------------------
Selling and general expenses (1,754) (1,754)
-------------------------------------------------------------------------
Other current operating income 110 110
-------------------------------------------------------------------------
Other current operating expenses (52) (52)
-------------------------------------------------------------------------
Amortization of intangibles (906) 875(a) (31)
-------------------------------------------------------------------------
Operating income - current(*) 1,734 875 2,609
-------------------------------------------------------------------------
Restructuring costs - -
-------------------------------------------------------------------------
Impairment of PP&E and intangibles - -
-------------------------------------------------------------------------
Gain/loss on disposals, and
litigation - -
-------------------------------------------------------------------------
Operating income 1,734 875 2,609
-------------------------------------------------------------------------
Financial expenses (86) (86)
-------------------------------------------------------------------------
Financial income 46 46
-------------------------------------------------------------------------
Income before tax and associates 1,694 875 2,569
-------------------------------------------------------------------------
Income tax expense 71 (889)(b) (818)
-------------------------------------------------------------------------
Share of profit/loss of associates 191 22(c) 213
-------------------------------------------------------------------------
Consolidated net income 1,956 8 1,964
-------------------------------------------------------------------------
Minority interests 111 111
-------------------------------------------------------------------------
Net income after minority interests 1,845 8 1,853
-------------------------------------------------------------------------
Average number of shares
outstanding (million) 1,349.3 1,349.3
-------------------------------------------------------------------------
Earnings per share (in euros) 1.37 1.37
-------------------------------------------------------------------------
(*) Operating income before restructuring, impairment of PP&E and
intangibles, gains/losses on disposals, and litigation
The material impacts of the application of purchase accounting to
acquisitions (primarily the acquisition of Aventis) on the 2007 third-quarter
consolidated income statement are:
a) An amortization charge of (euro)875 million against intangible assets.
This adjustment has no cash impact on the Group.
b) Deferred taxes of (euro)889 million, comprising i) (euro)323 million
generated by the (euro)875 million amortization charge taken against
intangible assets, and ii) (euro)566 million arising from the impact
of the cut in German tax rates on deferred tax liabilities recognized
in 2004 on the remeasurement of acquired intangible assets of Aventis.
This adjustment has no cash impact on the Group.
c) In "Share of profit/loss of associates", income of (euro)22 million
relating to the amortization of intangibles, net of tax. This
adjustment has no cash impact on the Group.
2007 9-month reconciliation of consolidated income statement to adjusted
consolidated income statement
The adjustments to the income statement reflect the elimination of
material impacts of the application of purchase accounting to acquisitions,
primarily the acquisition of Aventis, amounting to (euro)1,138 million net of
deferred taxes (with no cash impact for the Group).
-------------------------------------------------------------------------
(euro) million 2007 Adjust- 2007
(unaudited) 9-month ments 9-month
consoli- adjusted
dated consoli-
dated
-------------------------------------------------------------------------
Net sales 21,141 21,141
-------------------------------------------------------------------------
Other revenues 845 845
-------------------------------------------------------------------------
Cost of sales (5,607) (5,607)
-------------------------------------------------------------------------
Gross profit 16,379 16,379
-------------------------------------------------------------------------
Research and development expenses (3,266) (3,266)
-------------------------------------------------------------------------
Selling and general expenses (5,558) (5,558)
-------------------------------------------------------------------------
Other current operating income 388 388
-------------------------------------------------------------------------
Other current operating expenses (188) (188)
-------------------------------------------------------------------------
Amortization of intangibles (2,739) 2,641(a) (98)
-------------------------------------------------------------------------
Operating income - current(*) 5,016 2,641 7,657
-------------------------------------------------------------------------
Restructuring costs (50) (50)
-------------------------------------------------------------------------
Impairment of PP&E and intangibles 5 (5)(b) -
-------------------------------------------------------------------------
Gain/loss on disposals, and
litigation - -
-------------------------------------------------------------------------
Operating income 4,971 2,636 7,607
-------------------------------------------------------------------------
Financial expenses (256) (256)
-------------------------------------------------------------------------
Financial income 145 145
-------------------------------------------------------------------------
Income before tax and associates 4,860 2,636 7,496
-------------------------------------------------------------------------
Income tax expense (570) (1,538)(c) (2,108)
-------------------------------------------------------------------------
Share of profit/loss of associates 542 40(d) 582
-------------------------------------------------------------------------
Consolidated net income 4,832 1,138 5,970
-------------------------------------------------------------------------
Minority interests 322 322
-------------------------------------------------------------------------
Net income after minority interests 4,510 1,138 5,648
-------------------------------------------------------------------------
Average number of shares
outstanding (million) 1,350.8 1,350.8
-------------------------------------------------------------------------
Earnings per share (in euros) 3.34 0.84 4.18
-------------------------------------------------------------------------
(*) Operating income before restructuring, impairment of PP&E and
intangibles, gains/losses on disposals, and litigation
The material impacts of the application of purchase accounting to
acquisitions (primarily the acquisition of Aventis) on the 2007 9-month
consolidated income statement are:
a) An amortization charge of (euro)2,641 million against intangible
assets. This adjustment has no cash impact on the Group.
b) A reversal of impairment losses of (euro)5 million. This adjustment
has no cash impact on the Group.
c) Deferred taxes of (euro)1,538 million, mainly comprising
i) (euro)974 million generated by the (euro)2,641 million amortization
charge taken against intangible assets, and ii) (euro)566 million
arising from the impact of the cut in German tax rates on deferred tax
liabilities recognized in 2004 on the remeasurement of acquired
intangible assets of Aventis. This adjustment has no cash impact on
the Group.
d) In "Share of profit/loss of associates", income of (euro)40 million
relating to the amortization of intangibles, net of tax. This
adjustment has no cash impact on the Group.
Appendix 5: Trends in selected adjusted income statement items, net of
----------------------------------------------------------------------
tax
---
-------------------------------------------------------------------------
(euro) million 2007 Q3 2006 Q3 2007 2006
9 months 9 months
-------------------------------------------------------------------------
Restructuring costs - - (35) -
-------------------------------------------------------------------------
Net gains/(losses) on
disposals - - 447(3)
-------------------------------------------------------------------------
Provisions for financial
instruments, litigation,
tax inspections and other
items (30)(1) - 151(2) 13
-------------------------------------------------------------------------
TOTAL net of tax (30) - 116 460
-------------------------------------------------------------------------
(1) Income tax expense of (euro)51 million related to the cut in tax
rates in Germany, Spain and the United Kingdom, partly offset by the
settlement of tax disputes ((euro)21 million)
(2) Includes:
- Tax risks/settlement of tax disputes: (euro)244 million
- Income tax expense related to the cut in tax rates in Germany,
Spain and the United Kingdom: -(euro)51 million
- Harmonization of welfare and healthcare plans for retirees:
-(euro)42 million
(3) Includes:
- Exubera(R): (euro)384 million
- Animal Nutrition: (euro)31 million
-------------------------------------------------------------------------
REMINDER
8.00 am CET - WEBCAST
& CONFERENCE CALL (English) The 3rd quarter 2007 sales and earnings
will be reviewed by Mr. Hanspeter Spek,
Executive Vice President, Pharmaceutical
Operations and Mr. Jean-Claude Leroy,
Executive Vice President, Finance and
Legal.
The slides will be available on
www.sanofi-aventis.com.
This presentation will be followed by a
Q&A session.
CALL-IN NUMBERS The conference will also be available by
telephone via the following numbers:
France +33 (0) 1 70 99 42 97
UK +44 (0) 207 806 1966
USA +1 718 354 1391
AUDIO REPLAY Available online at www.sanofi-aventis.com
and through the numbers below (until
November 10, 2007):
France +33 (0) 1 71 23 02 48
UK +44 (0) 207 806 1970
USA +1 718 354 1112
Access code 6804707#.
For further information: Sanofi-aventis: Media Relations: (+) 33 1 53 77
44 50, media-relations@sanofi-aventis.com; Investor Relations: (+) 33 1 53 77
45 45, IR@sanofi-aventis.com; www.sanofi-aventis.com
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