Sanofi Returns More Cash to Shareholders
Sanofi certainly covered more than just the impact of the euro currency in the announcement of its results, and we found two additional points of central interest.6
1. 21st Consecutive Annual Dividend Increase: The company proposed a dividend for the 2014 year of 2.85 euros per share, which would represent its 21st consecutive year of a dividend increase, as well as a payout ratio of nearly 55%.
2. Increase in Net Share Buybacks of Nearly 500 Million Euros: In 2014, Sanofi’s increase in net buyback activity was 484 million euros, to a total of 1.1 billion euros. It’s worth noting that the firm’s net buybacks as recently as 2012 were less than 200 million euros, so this represents significant growth.
Economic Growth and Profit Growth Can Be Quite Different
Europe’s lackluster economic growth and potential for disinflation to become deflation have been widely publicized, and they are major contributing factors to Draghi’s January 22, 2015, blockbuster quantitative easing announcement. However, Sanofi’s results show us that profit growth and positive results at the company level are not necessarily connected directly to economic growth—especially for significant exporters. Sanofi is a great example of a truly global company that just happens to be incorporated within Europe, and it is a good example of the type of firm that the WisdomTree Europe Hedged Equity Index generates exposure to.
1Source for three bullets: Bloomberg, with data as of specified periods.
2Sanofi had a 4.32% weight in HEDJ as of 12/31/14.
3Source: Bloomberg, as of 7/24/12 when the euro hit $1.2061.
4Source: Annual Results 2014, Sanofi presentation, 2/5/15.
5Source: Bloomberg, with levels of euro measured as of 12/31/14 and 2/5/15.
6Source for both bullets: Annual Results 2014, Sanofi presentation, 2/5/15.
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