Currency Volatility Overshadows Sanofi’s Strong Q1, Clouding 2025 Outlook

Charles HayesThursday, Apr 24, 2025 5:20 am ET
14min read

Sanofi’s first-quarter earnings delivered robust top- and bottom-line growth, with revenue surging 9.7% year-on-year to €9.90 billion and business operating income jumping 20.1% to €2.90 billion. Yet shares dipped 0.9% after the release, as currency headwinds emerged as a critical threat to the company’s full-year targets. Despite reaffirming its 2025 guidance,

warned that currency fluctuations could shave 1-2% off sales and 1.5-2.5% from business operating income per share (EPS). Analysts now caution that macroeconomic uncertainties—particularly exchange rate volatility—could force further downward revisions to forecasts.

The Currency Challenge: A Double-Edged Sword

Sanofi’s exposure to currency fluctuations stems from its multinational operations, with 60% of sales generated outside Europe. The company’s latest report cited the strengthening U.S. dollar as a primary driver of losses, as many transactions are denominated in euros. CFO François-Xavier Roger underscored the unpredictability: “We operate in a volatile world where a number of things are difficult to predict.”

The financial impact is stark. Based on April 2025 exchange rates, currency effects now account for a larger drag than previously estimated. In February, Sanofi had projected a 0.5-1% sales hit from currencies; that range has nearly doubled. Analysts at Jefferies now warn of a potential 3% downside to business EPS, while JPMorgan suggests consensus estimates could be trimmed further due to the “unfavorable macro backdrop.”

Broader Risks Loom: Tariffs and Supply Chain Pressures

Currency woes are compounding other industry challenges. Sanofi faces the specter of U.S. pharmaceutical tariffs proposed under former President Donald Trump’s policies, which could disrupt supply chains and patient access to treatments. While these tariffs have yet to materialize, the uncertainty adds to investor anxiety.

The company’s Q1 strength was largely driven by its diabetes and rare-disease divisions, with Dupixent (eczema and asthma drug) contributing €2.1 billion in sales. However, these gains are now overshadowed by external risks.

A Delicate Balancing Act

Sanofi’s reaffirmed guidance signals confidence in its core businesses. The company projects 2025 sales of €48-€50 billion and business operating income of €12.5-€13.5 billion. Yet the fine print reveals caution: these targets now explicitly factor in currency risks, a shift from earlier projections that treated currencies as a minor variable.

The market’s reaction highlights skepticism. While Q1 results were “solid” (per JPMorgan), the stock’s dip reflects lingering doubts about Sanofi’s ability to navigate a perfect storm of exchange rate swings, trade tensions, and macroeconomic uncertainty.

Conclusion: Navigating the Currency Crossroads

Sanofi’s dilemma epitomizes the challenges facing global pharmaceutical companies in 2025. Despite strong fundamentals—Q1’s 20% operating income growth and 9.7% revenue expansion—the currency headwinds and geopolitical risks have created a precarious outlook.

The numbers tell the story: a potential 2.5% EPS reduction from currencies alone, plus the 3% downside scenario flagged by Jefferies, suggests that even a modest further decline in euro/dollar parity could tip results into underperformance. Investors will closely monitor currency trends, U.S. trade policy developments, and Sanofi’s hedging strategies in the coming quarters.

For now, Sanofi’s shares remain caught between its operational resilience and the storm clouds of an unpredictable global economy. The path to meeting its 2025 targets hinges on stabilizing exchange rates—and hope that the world’s volatility subsides.