2015 Financials and Strategic Update. March 2016

Transcription

1 2015 Financials and Strategic Update March 2016

2 AGENDA 2015 results Virbac strategic perspectives Appendix : 2016 Agenda 2

3 2015 FINANCIALS SUMMARY (1/3) P&L : St. Louis voluntary interruption following FDA inspection: drop of revenue : M$ vs (-60%); drop of operating profit : M$ vs Successful integration of Sentinel: 95 M$ in revenue; 34.8 M$ in (marginal) EBITA (= EBIT before amortization of intangibles from acquisitions). Solid organic growth outside of the US except France : +4.0% in Europe excluding France; -8.2% in France (drop of antibiotics sales following new law); +6.3% in the rest of world. 3

4 2015 FINANCIALS SUMMARY (2/3) Slight decrease of EBITA contribution globally outside of the US, linked to: Latin America; one-offs; good profit growth in Europe and Asia-Pacific. Sustained R&D spending Net profit: 9.4 M vs M in 2014 : includes 19.2 M (vs. 5.8 M in 2014) of amortization of intangibles from acquisitions; and 3.8 M of exceptionals (IFRS principles related to purchase price allocations in acquisitions). 4

5 2015 FINANCIALS SUMMARY (3/3) FINANCIAL SITUATION : Increase of total debt (605 M vs. 197 M in 2014) due to: Sentinel acquisition : 410 M$; US losses. Virbac has obtained waiver of covenant from its pool of banks and a large part of private lenders ( Shuldschein ). 5

6 CONSOLATED SALES Million euros Var.% Consolidated sales % - Exchange rate impact vs (49.1) Consolidated sales at constant rates % - change in perimeter (72.3) Consolidated sales. pro-forma at constant exchange rates % 6

7 2015 QUARTERLY GROWTH OF SALES* +4.0% +2.0% +0.0% (180.5) (185.8) +2.2% (202.7) (204.1) * Organic growth excluding impact of exchange rates -2.0% -4.0% -6.0% -8.0% -6.1% -6.8% Year -5.4% -10.0% -12.0% Q1 Q2 Q3 Q4-10.4% * ( ) :

8 SALES EVOLUTION 2015 M Organic growth -5.4% +9.3% +6.4% +10.3% % -60% Sentinel SBC A 2014 Outside USA USA Acquisitions Exchange rates A 2015 (at 2014 rates) 8

9 BREAKDOWN OF TOP 15 COUNTRIES (82% OF SALES) BY ORGANIC GROWTH countries decreasing significantly : USA, France, Brazil 29% 20% 4 countries with more than 10% growth : Mexico, UK, Spain, India 12% 21% 3 countries with 5% to 10% growth : Belgium, Australia, RSA 5 countries with a low evolution (-3% to +3%) : Italy, Switzerland, Germany, New Zealand, Chile 9

10 SALES GROWTH BY REGION 2015 at constant rates North America : M +9.2% -60% excl. Sentinel Latin America : M +3.8% Europe : M -0.2% Africa/Middle East : 31.2 M +1.1% France : -8% ROE : +4% Asia : M +11.4% Pacific : 84.3 M +5.5% 10

11 GROWTH BY SEGMENT 2015 COMPANION ANIMALS At constant exchange rates Net Revenue 2015 (M ) Growth at constant rates < - 5% - 5% to 0% 0% to +5% +5% to +10% Net Revenue 2015 (M ) Growth at constant rates excl. US < - 5% - 5% to 0% 0% to +5% +5% to +10% Companion Animals % % Parasiticides % % Endectocides Biologicals % % Antibiotics/Dermatology % % Specialities % % Petfood % % Horses % % Other % % 11

12 GROWTH BY SEGMENT 2015 FOOD PRODUCING ANIMALS At constant exchange rates Net Revenue 2015 (M ) < - 5% Growth at constant rates - 5% to 0% 0% to +5% +5% to +10% +10% to +15% Food Producing Animals % Bovine antibiotics % Bovine parasiticides % Other bovine products % Antibiotics swine/poultry % Other swine/poultry % Aquaculture % 12

13 SALES BREAKDOWN BY REGION AND BUSINESS 2015 Europe North America Other developped countries* Emerging countries 39.1% 15.8% 11.9% 33.1% (42.6%) (13.4%) (12.3%) (31.8%) Companion Animals 56.0% (54.1%) 28.1 % (28.9 %) 15.7 % (12.9 %) 5.1 % (5.4 %) 7.1 % (6.9 %) Food Producing Animals 42.8% (44.3%) 10,7 % (13.4 %) 6,3 % (6.3 %) 25,7 % (24.6 %) Others 1.2% ( ) : 2014 * Australia, New Zealand, Japan, Korea 13

14 2015 PROFIT & LOSS STATEMENT in M 31/12/2015 % 31/12/2014 % Variation Net sales % Gross margin on material cost % External expenses % Personnel expenses % Other expenses % Depreciation and amortisation % Net provisions (excluding inventories) % Current operating profit - adjusted % 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

15 BREAKDOWN OF EBIT (ADJUSTED) EVOLUTION M Evolution of the US contribution M Evolution outside of the US M USA excl. Sentinel Sentinel acquisition (marginal) ROW excl. R&D R&D Exceptionnal

16 CONTRIBUTION OF THE US OPERATIONS TO THE EBIT ADJUSTED (EXCL. R&D) M$ Legacy business Contribution To EBIT Adjusted Loss of margin Underabsorption of manufacturing cost Consulting expenses Inventory write-offs Other costs Other Activity : M$ Exceptional : M$ Sentinel (marginal) Contribution to EBIT Adjusted

17 CONTRIBUTION OF SENTINEL M Net revenue 85.8 Current operating profit adjusted 31.4 (Ebit adjusted) - marginal Amortization of intangibles acquired (13.3) = related to the Purchase Price Allocation (PPA) under IFRS Current operating profit 18.1 One-off / non recurring expense (7.9) = counterpart of inventory revaluation in the PPA Operating profit 10.2 Interest expense (7.4) Tax (1.0) Contribution to net profit 1.8 of which cash earnings 23.8 acquisition price is tax deductible 17

18 EVOLUTION OF CASH-FLOW M % % Operating cash-flow («EBIT DA») Net cash-flow

19 USE OF FUNDS M Net cash flow capex Working capital Dividends Acquisitions Other* = net debt increase Impact of Free cash flow on debt : : * Including translation variance 19 47

20 Au Au EVOLUTION OF NET DEBT 2015 M Net debt opening Net Cash flow CAPEX Working Capital Acquisitions Dividends Others Net debt closing

21 BALANCE SHEET ANALYSIS 2015 M Shareholder s equity Working capital Minority interests + LT reserves Fixed assets Net financial debt INVESTED CAPITAL CAPITAL EMPLOYED 16 21

22 BALANCE SHEET FINANCIAL RATIOS % Net debt / Shareholder s equity Group s share 49.3% 45.6% Net debt / Net cash-flow Net debt / Operating cash-flow

23 SHAREHOLDING Number of shares : Employees savings plan Treasury shares 0,9% 0,3% Other s 33,1% Employees savings plan 1,2% Others 49,7% 49,1% Dick Family 65,7% Dick Family In shares In voting rights 23

24 AGENDA 2015 results Virbac strategic perspectives Appendix : 2016 Agenda 24

25 Key points regarding outlook Mid term perspectives 25

26 2015: A VERY DIFFICULT YEAR USA (St. Louis plant) Latin America But some important achievements Growth of Sentinel, in spite of intensifying competition Success of European launches Strong momentum in Asia / Pacific 26

27 US MARKET SHARES: INTERNAL PARASITICIDES (DISPENSED DOSES) Dispensed doses Brand n 5 4,4% 4,5% MAT Nov. 14 vs Nov. 15 Iverhart (Plus + MAX) 5,8% 7,9% Brand n 3 15,0% 17,0% Sentinel (Flavor Tabs + Spectrum) 15,8% 15,3% Brand n 1 46,2% 44,4% 0,0% 5,0% 10,0% 15,0% 20,0% 25,0% 30,0% 35,0% 40,0% 45,0% 50,0% Source: Gfk 27

28 SUCCESS OF MAJOR EUROPEAN LAUNCHES 5 M European dog & cat parasiticide market 950 million 15 M Virbac share: 5.5% (stable in a market growing by 15%) N 5 External (fleas & ticks) 63% Internal (worms) 22% "Combos" 15% Virbac share: up from 3.3% to 9.6% in a stable market N 3 28

29 2015 ORGANIC GROWTH IN EMERGING MARKETS 2015 Virbac revenues 853 million RSA +5% % +6.9% Asia +11.8% Latin America +4%

30 2015 ORGANIC GROWTH IN EMERGING MARKETS 2015 Virbac revenues 853 million RSA +5% % 35% +6.9% Asia +11.8% Latin America +4% Chili (centrovet) 77 India % Mexico Colombia 41 Other Asia % Brazil & Other % -8% 30

31 2016 GROWTH PERSPECTIVES <0% <5% Sales 852 m Around Around 10% >20% 7% organic growth

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33 2016: GROWTH PERSPECTIVES Europe Moderate market growth Launch of new products (Effipro duo, Curacef duo) further growth expected from 2015 launches (Effitix, Milpro, New pet food range) Asia/Pacific Strong growth expected in all markets but Australia (expected stable) Latin America Pursuit of solid growth in Mexico and Colombia, recovery expected in Uruguay and Brazil, in spite of the economic crisis 32

34 2016: GROWTH PERSPECTIVES Aquaculture Unfavorable period of the cyclical Chilean salmon market: Market demand: decrease from historical markets: Brazil (economic crisis), US (Norwegian competition: weak krona and no use of antibiotic) Sanitary: Perception of efficacy of vaccines questioned. New SRS vaccine from competition? Expected decrease of antibiotics consumption Economics: Biomass decreasing, salmon production expected to fall by around 10% in 2016 Chilean salmon producers losing money since mid

35 COMPLIANCE: VIRBAC ST. LOUIS 30 Dec End of FDA inspections Numerous observations 2015 Management changes 70 recruitments in QA and Industrial Ops Consultants Regular reporting to the FDA Processes and procedures Training, training, training Information systems Oct-Dec Restarting Iverhart Plus and Equimax production 20 Jan Virbac responses QSIP (Quality system improvement plan) June 2015 Relaunching hygiene products 34

36 COMPLIANCE: VIRBAC ST. LOUIS 29 Dec FDA response Warning letter 7 observations Background repeat obs. 13 Jan FDA agrees to discuss our remedial plans 2016 objectives Restarting other areas of production Embedding quality culture Implementation of new information systemes Successfully carrying out upcoming inspection 11 Jan Virbac responses Fulfilment of all commitments Release under Parexel RFT (Right first time) culture and quality practices 11 Feb Presentation of FDA remedial action plan 35

37 PERSPECTIVES FOR US LEGACY PORTFOLIO ($ million, excluding Sentinel) Around 90 Upside: impact of end of fipronil exclusivity contract by one major US distributor 2014 Actual 2015 Actual 2016 Perspective 36

38 2016: FINANCIAL PERSPECTIVES Sales organic growth: around 7% EBITA perspective: above 10% End of year Debt/EBITDA ratio: below

39 MID TERM PERSPECTIVES Market Competition/consolidation Compliance Sources of growth 38

40 HUMAN HEALTH AND ANIMAL HEALTH Comparative changes in growth of markets ($ billion) Human +2.9%/year health Animal health +4.6%/year 22, Sources: IMS, Vetnosis

41 TOP 4 ANIMAL HEALTH MARKET SHARES 43% 6.5% 8.9% 13.3% 14.6% Bayer Intervet Merial Pfizer/ Zoetis 51.5% 6.9% 14.7% 13.2% 16.8% Elanco +Schering Plough +Fort Dodge 58% 12.7% 14% 11.9% 19.6% +Novartis Merck 64.5% 12.7% 14% 18.1% 19.6% +Boehringer Ingelheilm Source: Vetnosis Proforma 40

42 ANIMAL HEALTH MARKET SHARES Virbac 2.9% 3.8% 4.15% 4.15% Bayer Intervet Merial Elanco +Schering Plough +Novartis Merck +Boehringer Ingelheilm Pfizer/ Zoetis +Fort Dodge Source: Vetnosis Proforma 41

43 COMPETITION Rapid consolidation Virbac participates to the trend Room for 2 nd tier global players Niche/smaller segments less attractive for 1st tier players Opportunities in larger segments: Competitive price value positioning (e.g parasiticides) Customers wish to keep alternatives to 1st tier suppliers Opportunities in selected geographies (emerging markets) 2020 ambition: 5% global market share 42

44 VIRBAC INITIATIVES: MARKET/COMPETITION Share of Virbac sales in emerging countries 0 22% 32% Active external growth policy Major acquisitions Sentinel USA 2014 Centrovet (51%) Chile 2012 Santa Elena Uruguay 2010/2013 SBC Taiwan 2011/2015 Stockguard New Zealand 2012 Multimin New Zealand and Australia

45 QUALITY/COMPLIANCE Rising regulatory requirements increase barriers to entry Virbac is closing the gap in the most demanding countries/regions (US, Europe, Australia) France: strong investments in the last 5 years, new production sites, equipment, information systems, headcount (more than 100 people recruited in R&D, industrial operations, QA), procedures, training etc Satisfactory level reached (7 inspections in 2015) US: 2015/2016 catch up in a crisis mode: satisfactory level to be confirmed by upcoming FDA inspection Australia: continuous improvements in the site acquired from American Home Virbac in a proactive mode in the countries with lower but rising regulatory requirements 44

46 BREAKDOWN OF SALES BY PRODUCTION SITES France, USA, Australia 43% Third parties (including Sentinel) 35% All others 22% 45

47 2020 PERSPECTIVES: WHERE IS THE ORGANIC GROWTH GOING TO COME FROM? Main drivers / geographics (vs 2016) US: +100M$ Emerging markets, particularly Asia: +100M Main drivers / product categories & species Companion animals: Parasiticides Specialty pharmaceuticals Non pharma regulated (hygiene, dentals, nutritional, petfood) Food producing: Dairy Swine vaccines (Asia), bovine vaccines (Latin America) Aquaculture (cold and warm water) 46

48 AGENDA 2016 results Virbac strategic perspectives Appendix : 2016 Agenda 47

49 2016 AGENDA April 13* June 24 July 18* September 20* October 13* Q1 sales Annual shareholders meeting Q2 H1 sales Half-year financial results Q3 sales January 17, 2017*Q4 Full year sales * After market close 48

50 Thank you for your attention

51 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 : 51