H results & perspectives. September 2017

Transcription

1 H results & perspectives September 2017

2 AGENDA 2017 half year results 2017 perspectives 2018 and beyond Appendix : 2017 agenda 2

3 2017 FINANCIALS SUMMARY (1/2) Organic growth of ~2% outside of the US Latin America and Asia, excluding Aqua, growing at respectively ~+11% and ~+6% despite GST impact in India and benefiting from a licensing revenue Europe and Pacific globally stable vs 2016 Aqua globally stable vs H but rebounding vs H US revenue decline by 12% due to : Slower than expected recovery for Iverhart range Higher pressure on price impacting gross to net especially on Sentinel Higher base in H due to Iverhart plus stocking effect Globally stable EBIT adjusted 2 constant exchange rates ( M vs M ) Contribution of US operations 1 to the EBIT Adjusted 2 lower than 2016 due to level of activity and price pressure which impacted the gross margin EBITA growth in all regions except Asia-Pacific One-off positive impact of a 2.4 M licensing revenue in H Globally stable R&D spending as a percentage of sales Exchange rate positively impacting profitability (+1.4 M ) 3 1. Before R&D 2. Current Operating profit before depreciation of assets arising from acquisitions

4 2017 FINANCIALS SUMMARY (2/2) Positive net results of consolidated activity : 16.0 M vs 15.2 M in 2016 : Increasing net financial expenses compensated by lower taxes vs 2016 Stability of net debt compared with end of 2016 Net 543 M vs. 547 M at December 2016 No dividend paid on 2016 results Optimization of working capital (incl. extension of factoring program) and positive exchange rate impact compensate the usual seasonality increase of debt during the first semester Net debt to EBITDA 4,64 1 thus below our 5,5 at June 2017 Reinforced liquidity with a new credit line of 90 M$ 1. constant exchange rate (calculated at 2016 exchange rates and including the part of Virbac SA funding instruments in USD) 4

5 EXCHANGE RATES H Weighted average exchange rates USD GBP JPY MXN AUD ZAR BRL INR CHF CLP Actual Actual Variance A17/A16 1.6% -9.6% 1.1% -3.4% 5.7% 20.3% 19.4% 5.6% 1.7% 8.0% Weighted average exchange rates NZD COP CRC PHP THB VND TWD CNY KRW DKK Actual Actual Variance A17/A16 7.0% 11.5% -1.4% -3.4% 5.2% 1.8% 9.8% -1.8% 6.8% 0.2% 5

6 CONSOLIDATED SALES H Million euros Var.% Consolidated sales % - Exchange rate impact vs Consolidated sales at constant rates % - Change in perimeter 0.0 Consolidated sales, pro-forma at constant exchange rates % 6

7 SALES EVOLUTION M H M (1.8%) at actual rates -2.1 M (-0.5%) at constant rates A 2016 Europe ROW US Exchange rates A

8 SALES GROWTH BY REGION H at constant rates North America 64.7 M -12.0% Europe M +0.5% Asia Latin America 73.5 M +3.6% Africa/Middle East 16.0 M -4.6% 69.6 M +7.9% Pacific 43.6 M -2.1% 9

9 SALES GROWTH BY SEGMENT COMPANION ANIMALS H at constant rates A Parasiticides 45.6 (-20%) Endectocides 40 (-6.4%) Antibiotics/Dermatology 34.4 (1.2%) 0.4 Biologicals 34.4 (-8.4%) Other 31.8 (1.5%) 0.5 Specialties 29.5 (14.2%) 3.6 Petfood 15.4 (4.1%) 0.6 Horses 10.9 (-1.5%) Exchange rate 2.0 A

10 SALES GROWTH BY SEGMENT FOOD PRODUCING ANIMALS H at constant rates A Other bovine products 63.6 (4.2%) 2.4 Bovine antibiotics 33.2 (4.2%) 1.3 Aquaculture 28.4 (-0.4%) Bovine parasiticides 27.7 (11.3%) 2.7 Antibiotics swine/poultry 21.9 (1.6%) 0.3 Other swine/poultry 13.4 (8.8%) 1.0 Exchange rate 7.5 A

11 SALES BREAKDOWN BY REGION AND BUSINESS Europe North America 39.6% 14.8% (40.8%) (16.8%) Other developped countries* Emerging countries 11.9% 33.7% (11.9%) (30.4%) H Companion Animals 55.3% (58.7%) 28.6 % (30.2 %) 14.5 % (16.8 %) 4.5 % (5.0%) 7.7 % (6.6 %) Food Producing Animals 43.0% (40.3%) 10.6 % (10.3 %) 7.2 % (6.6 %) 25.3 % (23.4 %) Others 1.7% ( ) : 2016 * Australia. New Zealand. Japan. Korea 12

12 BREAKDOWN OF EBIT ADJUSTED EVOLUTION H M 1,9-2,3 1,4-2,6 2,0 0,6 39,7 40,7 13

13 2017 PROFIT & LOSS STATEMENT H in M 30/06/2017 % 30/06/2016 % Variation Net sales % Gross margin on material cost % External expenses % Personnel expenses % Other expenses % Depreciation and amortisation % Net provisions (excluding inventories) % Current operating profit before depreciation of assets arising from acquisitions % Amortisation of intangibles arising from acquisitions % Operating profit from ordinary activities % Non recurring expenses Operating profit % Net financial expenses % Profit before tax % Income tax expense % Share in earnings - Equity method Net result of consolidated entities % Non-controlling interests Net result - Group's share % 14

14 EVOLUTION OF CASH-FLOW M % H % Operating cash-flow Net cash-flow 15

15 USE OF FUNDS H M Net cash flow Capex Working capital Dividends Acquisitions Other 1 = net debt increase Free Cash Flow H : H : H H H H Including translation variance 16

16 EVOLUTION OF NET DEBT H M Net debt opening Net Cash flow Capex Working Capital Acquisitions Dividends Others Net debt closing

17 BALANCE SHEET ANALYSIS H M Working capital Fixed assets Shareholder s equity Minority interests + LT reserves Net financial debt 30/06/ /06/ /06/ /06/2017 INVESTED CAPITAL CAPITAL EMPLOYED 18

18 BALANCE SHEET FINANCIAL RATIOS % % % Net debt/shareholder s equity Group s share Net debt/net cash-flow Net debt/operating cash-flow 19

19 SHAREHOLDING Number of shares : In Shares In Voting Rights Public 49.1% Treasury shares 0.3% Employees savings plan 0.9% Dick Family 49.7% Employees savings plan 1.2% Public 33.1% Treasury shares 0.0% Dick Family 65.7% 20

20 AGENDA 2017 half year results 2017 perspectives 2018 and beyond Appendix : 2017 agenda 21

21 THE VIRBAC ROADMAP «Roaring decade» «Setback and recovery» 2018 «Back to growth» 22

22 USA : 2017 PERSPECTIVES Revenues Ex-Virbac sales will decline for the full year: the exdistributors sales growth will be too low to offset the $25 million stocking of In the first half these growth rates are respectively -12% and around +5% - Iverhart clinic penetration and turnover grow too modestly to create significant reorders by distributors - Sentinel stable in gross sales at distributor level (sales to clinics), but gross to net degradation triggers a decline in ex-virbac sales - Return to commerce of products of the other ranges is slower than expected, but growth should be better in the second half (dentals, dermatology with Ketochlor and potentially Easotic) Share of H Group sales 14.8% Profitability Cost base improvement : full impact of the fall 2016 field force adjustment, optimization in Saint-Louis 23

23 IVERHART QUATERLY SHARES OF THE US INTERNAL PARASITICIDES MARKET FOR DOGS 3% 2% 1% 0% Q Q Q Q Q Q Source Kynetec Delivered doses (ex distributors) Dispensed doses (ex clinics) 24

24 US MARKET SHARES INTERNAL PARASITICIDES FOR DOGS Dispenses $ MAT 40% 30% 33% 33.3% 29% 20% 24.5% 10% 14.4% 13.1% 0% 9% 7.8% 6.9% 1.8% December 15 June 16 December 16 June 17 Source Kynetec Sentinel Brand 1 Brand 2 Brand 3 Brand 4

25 CURRENT AND FUTURE STATUS OF LEGACY PRODUCTS MANUFACTURED IN THE ST. LOUIS PLANT Number of products sourced from St. Louis, sold in 2014 Share of ex St. Louis 2014 net sales Discontinued % 6 % 7 % % 5 % 22 % Expected RTC % RTC* as of June 30, * Returned to commerce 26

26 AQUACULTURE : 2017 PERSPECTIVES Some growth expected in Chile, uncertainty seems to decrease Share of H Group sales 8.6% Moderate increase of the biomass following the sharp reduction of 2016, Centrovet vaccines increasing again in spite of the impact of the new live SRS vaccine from Pharmaq Level of antibiotic consumption does not decrease in spite of the joint government/salmon farmers initiative (Pincoy project) Fast growth of the warm water business in Asia, particularly India 27

27 EUROPE : 2017 PERSPECTIVES Share of H Group sales Moderate growth expected, both in companion animals and food producing animals 38.9% Growth drivers in companion animals : - Petfood :roll out of Veterinary HPM Preventive, launch of HPM Diet - Suprelorin, Easotic Growth drivers in food producing animals : - Bovigen scour vaccine - Curacef Duo, Shotapen (cattle antibiotics) Temporary reduction of Canigen Dog vaccines production capacities - Negative impact fading out in the second half of the year Stable profitability 28

28 LATIN AMERICA/ASIA/PACIFIC : 2017 PERSPECTIVES Share of H Group sales Significant growth expected Double digit growth expected in many markets : - Brazil - China (CA, digital initiative) - Some emerging markets 36.2% Rebound expected in India in the second semester after the implementation of the GST Flat perspectives in Australia (streamlining) Temporary reduction of Canigen Dog vaccines production capacities - Negative impact fading out in the second half of the year Profitability improvement in Latin America, stability in Asia/Pacific 29

29 2017 UPDATED PERSPECTIVES SUMMARY 2017 net sales : around 2016 constant rate (2017 Q3 net sales growth constant rate) EBIT adjusted 1 ratio 2 : around 2016 constant rate Debt reduction : 30 to 50 M (no dividends paid by Virbac SA) 1. EBIT Adjusted : Current Operating profit before depreciations of assets arising from acquisitions 2. Ratio to net sales 30

30 AGENDA 2017 half year results 2017 perspectives 2018 and beyond Appendix : 2017 agenda 31

31 THE VIRBAC ROADMAP «Roaring decade» «Setback and recovery» 2018 «Back to growth» 32

32 2018 AND BEYOND : GROWTH FACTORS AND PROFITABILITY IMPROVEMENT OPPORTUNITIES Geographies Reversal of trend in the USA Phase out of the «rubber band» effect Return to market of Easotic and later Soloxine New products registered and launched from 2018 on Margin improvements expected on Sentinel Spectrum (in St. Louis) and Sentinel Tabs (3 rd party) Aquaculture : positive mid and long term outlook Cold water : - growing global demand for salmon - expected improvement of competitiveness of Chilean farmers Warm water : - growing global demand for tilapia, shrimp - opportunities linked to the structuring of the sector Emerging markets : solid growth expected in many countries particularly India, Brazil and China (Companion Animals) Europe : continuation of current trend 33

33 ACROSS THE BOARD Innovation Stronger flow of new products hitting the market Cost control and debt control Major effort to step up quality and compliance gradually leveled off (USA, France) Initiatives to maintain Opex evolution strictly under revenue and margin growth Initiatives to control and optimize Capex and working capital 34

34 ESTIMATED PEAK SALES POTENTIAL OF THE MAIN INNOVATION PROJECTS ( September 2017) Launch Year Companion Animals M Food Producing Animals M Dermatology (USA/Japan) Swine vaccine (Asia) 2018 Anti infectious (Europe) Dental (USA/Europe) 27 Internal parasiticides for ruminants (Pacific) 10 Nutraceuticals (USA) External parasiticides (Latam) Endectocides (USA) 2019 External parasiticides (Japan) Vaccine for ruminants (Latam) Dental (WW) 10 2 Anti infectious (USA) External parasiticides and endectocides for ruminants (Latam) 2020 Dermatology (USA) Endectocides (USA/Europe) Internal parasiticides for ruminants (Europe) Internal parasiticides for ruminants (Australia) External parasiticides (USA) Vaccines (Australia) 38 17

35 Thank you for your attention

36 AGENDA 2017 half year results 2017 perspectives 2018 and beyond Appendix : 2017 agenda 37

37 2017 AGENDA April 12* June 23 July 17* September 11* October 12* January 16, 2018* Q1 sales Annual shareholders meeting Q2 H1 sales Half-year financial results Q3 sales Q4 Full year sales * After market close 38

38 Disclaimer This presentation contains forward-looking statements with respect to Virbac s profitability and financial condition, business operations, projects and outlook. Although Virbac s management believes that such forward-looking statements are based on reasonable assumptions, as made as of the date of this presentation, such statements do not constitute guarantees of future performance. Actual results may differ materially from the forward-looking statements as a result of a number of risks and uncertainties, many of which are outside Virbac s control, including but not limited to any risk described in the reports and documents regularly made available to the public and filed to the AMF. Investors and security holders may obtain a free copy of such documents at : corporate.virbac.com