Sanofi's earnings are a half-full, half-empty situation. Yes, the company beat analyst expectations, but analyst expectations were low to begin with. Yes, revenues increased by 6.2%, but without the benefit of the strong euro, sales were essentially flat. Yes, emerging markets sales took a 10% leap, consumer healthcare increased 11.3%, and the diabetes drug Lantus jumped even more--16.5%, to €1.228 billion. But the loss of Plavix exclusivity took a €331 million bite straight out of the bottom line.
The biggest example isn't in the numbers, however. It's the French company's ($SNY) plans to cut costs in its home country. Any time jobs are threatened, it's a point-of-view thing. Good for a company's numbers, perhaps good for operations if handled correctly. But not so much for the workers whose jobs are threatened. And in this case, not so good for Sanofi's image in France.
And CEO Christopher Viehbacher is well aware of the fine line he's walking. As Bloomberg reports, Viehbacher acknowledged that restructuring in France will take finesse, at a time when big French companies have announced thousands of layoffs and politicians are promising to fight back.
That doesn't mean it can't, or shouldn't, be done. In spite of critics' protests that Sanofi is raising its dividends and reaping profits. "I won't apologize for being a profitable company," Viehbacher said on a call announcing Q2 results. "This is what companies are supposed to do."
Viehbacher is easing into the French job-cutting. No official word on numbers; the company is talking with unions now. (Unions say up to 2,500 positions are threatened.) Official promises, however, that Sanofi will take its time with the layoffs. Whether this approach will soften opposition remains to be seen. But don't expect opposition to soften Viehbacher's resolve. He's not called the "Smiling Killer" for nothing.
- get the release from Sanofi (PDF)
- read the Bloomberg story