Buying Sanofi Shares = Short Euros?
Looking to short the euro? You could buy shares of Sanofi, the world’s fourth-largest drug company by sales, because of a majority of the company's sales are outside the Euro-area, while its costs are mostly denominated in euros.
The French drugmaker has about a third of its business in the U.S., and less than that in Europe, Chris Viehbacher, the company’s CEO told CNBC Asia’s “Squawk Box” on Wednesday. According to Reuters, just 27 percent of its annual sales were generated in Europe last year.
“So we’re diversified from a market point of view,” Viehbacher said. “We are also relatively insulated from all of the euro issues. You could consider us short euros. We have 75 percent of our revenue outside the euro zone.”
Best known for Plavix, a blood-thinning drug, the company is now expanding in emerging markets including China, India and Brazil. According to Sanofi, sales in emerging markets rose more than 10 percent last year to 10 billion euros ($12.72 billion), or 30.3 percent of total sales.
Sanofi’s shares , which have fallen more than 5 percent since the beginning of the year, gained about 16 percent last year even as the broader CAC 40 Index fell nearly 17 percent. Sanofi closed almost 2 percent higher in Paris on Tuesday.
Beat Wittmann, CEO of Dynapartners, a Zurich-based asset manager, says Sanofi is a good investment because of its growing presence in emerging markets.
“People look for yield, and they are the ideal way to play globalization,” Wittmann told CNBC. “From an investor’s point of view, they are a very defensive investment. They offer good yield.”
The company already pays a 5 percent dividend yield and CEO Viehbacher said the company's payout ratio, which measures the amount of earnings paid to shareholders, is moving to 50 percent.
But the company is also facing challenges. Plavix, its best-selling drug, ran out of patent protection last week and will face increasing competition from cheaper generic copies. Viehbacher said he expects a fall of 12-15 percent in the company’s earnings per share this year.
By CNBC’s Jean Chua.