Virbac SA · EURONEXT:VIRP
Virbac SA — H1 2014 Earnings Presentation
35 slides from Virbac SA's earnings presentation, September 2014
Slide 1: 2014 First Half Financials and Strategic Update
2014 First Half Financials and Strategic Update September 2014
Slide 2: Agenda
Agenda • First half of 2014 performance • Virbac strategic perspectives • Appendix : agenda of next communications 2
Slide 3: First half of 2014 – Key points
First half of 2014 – Key points • Evolution of revenue : +3.0% organically | -1.5% in total significantly impacted by 2 factors : Exchange rates = -5.6% impact on growth Poor performance in the US pending re-introduction of Iverhart Plus : -16% Organic growth outside of the US has reached +6.6% over
Slide 4: Sales evolution
Sales evolution First half of 2014 M€ 400 Organic growth +3.0% +20.7 +5.6% -2.6% 390 +3.8 +1.0% -5.6% 380 -9.5 372.0 370 366.3 -1.5% 360 -20.7 350 340 330 1st 1st half half 2013 2014 320 Organic growth USA Acquisitions Exchange 4 excl. USA (Uruguay) Rates
Slide 5: Quarterly organic growth
Quarterly organic growth First half of 2014 +5.0% +4.3% +4.0% +3.0% 1st half +3.0% +2.0% +1.8% +1.0% 180.5 M€ 185.8 M€ +0.0% Quarter 1 Quarter 2 5
Slide 6: Sales growth by region
Sales growth by region First half of 2014 - at constant exchange rates - Europe : 156.0 M€ North America : 45.9 M€ +5.2% -16.7% Asia : 44.4 M€ Africa/Middle East : 15.0 M€ +11.0% +29.6% Latin America : 64.5 M€ Pacific : 40.5 M€ +6.5% +9.1% 6
Slide 7: Breakdown of Top 14 countries by organic growth
Breakdown of Top 14 countries (80% of sales) by organic growth First half of 2014 USA (-16%) 6 countries with more than 10% growth 15.7% 28% CHILE (aquaculture) 10.8% slightly negative 45.6% 6 countries with 5% to 10% growth 7
Slide 8: Growth by segment | Companion animals
Growth by segment | Companion animals First half of 2014 Net Growth at constant rates Businesses / Ranges Revenue +10% - 5% to 0% to +5% to < - 5% to 2014 (M€) 0% +5% +10% +15% Companion Animals 197,8 -1,4% Parasiticides 49,1 -15,7% Biologicals 36,8 4,0% Antibiotics/Dermatology 32,8 5,2% Specialitie
Slide 9: Growth by segment | Food producing animals
Growth by segment | Food producing animals First half of 2014 Net Growth at constant rates Organic growth Businesses / Ranges Revenue +10% - 5% to 0% to +5% to +10% to - 5% to 0% to +5% to < - 5% > 15% < - 5% to > 15% 2014 (M€) 0% +5% +10% +15% 0% +5% +10% +15% Food Producing Animals 162,6 11,8% 9,5
Slide 10: Net Revenue by Area and Business
Net Revenue by Area and Business at actual rates and perimeter Northern Other developped Emerging Europe America countries* countries 42.6% 12.5% 12.9% 32% Companion 54.0% 29.8% 12% 5.5% 6.7% Animals Food producing 44.4% 24.8% Animals 12.6% 7.0% Other 1.6% 10 * Australia, New Zealand, Japan, Korea
Slide 11: Consolidated profit & loss statement
Consolidated profit & loss statement First half of 2014 2014 % 2013 % % Variation Million euros Net sales 366.3 100.0 372.0 100.0 -1.5% Margin on material cost 251.5 68.7 256.0 68.8 -1.8% Net operating expenses 201.6 55.1 199.8 53.7 +0.9% Operating profit from ordinary activities 49.9 13.6 56.2 15.1
Slide 12: Breakdown of EBIT evolution
Breakdown of EBIT evolution First half of 2014 M€ 65 60 56.2 55 +1.9 +1.3 49.9 50 -5.3 -4.2 45 40 35 EBIT EBIT 1st half 1st half 2013 2014 30 US Business Rest of World Acquisitions Exchange (Uruguay) Rates 12
Slide 13: Breakdown of EBIT evolution
Breakdown of EBIT evolution First half of 2014 M€ 56.2 +0.5 +0.1 55 -1.3 -1.4 49.9 50 -4.2 45 40 35 30 25 EBIT EBIT 1st half 1st half 2013 2014 20 Net margin Sales & R&D Other Exchange 13 Marketing expenses Rates
Slide 14: Evolution of cash-flow
Evolution of cash-flow First half of 2014 M€ 71.0 65.0 -8.5% 53.4 50.2 -6.0% Operating cash-flow (« EBIT DA ») Net cash-flow 30.06.13 30.06.14 14
Slide 15: Evolution of net debt
Evolution of net debt First half of 2014 M€ Net Working Other assets Acquisitions Dividends Other * = Net debt Cash flow CAPEX and Capital increase liabilities 26.4 -0.2 87.0 16.3 -2.0 77.0 12.4 23.6 28.3 H1 2014 H1 2013 28.2 44.6 0 37.4 H1 2014 H1 2013 30.8 21.8 -50.2 -53.4 15 * Including translati
Slide 16: Balance sheet analysis
Balance sheet analysis First half of 2014 M€ 741.5 741.5 661.7 661.7 Working capital 194.8 157.7 Shareholder’s equity 350.8 378.6 Minority interests Fixed assets 504.0 546.7 100.0 97.8 + LT reserves 210.9 265.1 Net financial debt 06.30.13 06.30.14 06.30.13 06.30.14 INVESTED CAPITAL CAPITAL EMPLOYED
Slide 17: Balance sheet – financial ratios
Balance sheet – financial ratios First half of 2014 H1 2013 2013.12 H1 2014 70.0% 60.1% 49.3% Net debt / Shareholder’s equity Group’s share Net debt / Net cash-flow 1.97 1.82 2.64 Net debt / Operating cash-flow 1.49 1.32 2.04 17
Slide 18: Shareholding
Shareholding Number of shares : 8 458 000 Breakdown as of June 2014 Employees Employees savings plan Treasury shares savings plan Others Others Dick Family Dick Family In shares In voting rights 18
Slide 19: Agenda
Agenda • First half of 2014 – Financial performance • Virbac strategic perspectives • Appendix : agenda of next communications
Slide 20: Recent quarterly organic growth
Recent quarterly organic growth 12,3% 10,7% 9,8% 8,6% 8,3% 7,5% 6,5% 6,1% 6% 4,3% 2,1% 1,3% 1,7% -2,3% • Effipro roll out • Iverhart growth (Novartis • Low market growth (1% in • Iverhart growth plant closure) real terms) • CaniLeish launch • CaniLeish launch in major • Iverhart + withdrawal markets
Slide 21: US Strategy
US Strategy Global AH market $ 23 B $ 7,8 B VIRBAC $ 3,7 B C.A. 3,7% m.s. / n°9 (48%) 34% North America $ 4,1 B VIRBAC F.P.A. (52%) 0 Source : Vetnosis, CEESA, Virbac analysis 21
Slide 22: Components of growth strategy in the US
Components of growth strategy in the US • New management team • Iverhart+ back to the market from July 1st • Securing production of FDA products • Multi-channel strategy in pets : Vets clinics, Vet VIPPS (Verified Internet Pharmacy Practice sites), pharmacies • Innovation : • promising projects in p
Slide 23: EUROPE Strategy
EUROPE Strategy Global AH market $ 23 B $ 7,1 B VIRBAC 43% C.A. 9,6% m.s. / n°5 31% Europe 57% VIRBAC F.P.A. 3,9% m.s./ n°7 Source : Vetnosis, CEESA, Virbac analysis 23
Slide 24: Growth strategy in Europe
Growth strategy in Europe • Defense of existing product portfolio • Investment in manufacturing (new injectable plant in Carros) • Securing key existing products (sourcing of actives, pharmaceutical compliance) • Innovation : launches of 2014/2015, with a combined peak sales potential of 30m€ • CA p
Slide 25: ROW Strategy
ROW Strategy Global AH market Estimate by $ 23 B region VIRBAC 13% Pacific m.s. > 10% 35% Latin 35% ROW America VIRBAC m.s. > 5% 48% Asia VIRBAC m.s. ~ 3% Source : Vetnosis, CEESA, Virbac analysis 25
Slide 26: ROW: Perspectives in main countries
ROW : Perspectives in main* countries 1st half sales growth Comments/perspectives <0% 0/+5% +5%/+10% +10%/+15% >15% Australia Extension of withdrawal periods in aqua farms required by authorities Chile in 1st half. Recovery expected in 2nd half India Mexico Slow down expected in 2nd half due to Braz
Slide 27: Share of companion animal parasiticide market
Share of companion animal parasiticide market In the global AH market In VIRBAC 14% 17,5% 27
Slide 28: US/EU companion animal parasiticide market
US/EU Companion animal parasiticide market ($3 billon) $1600m $570m EUROPE USA 4% 6,5% 300m$ 300m$ $300m $300m EUROPE 0% USA 0% 5% Virbac m.s. 28
Slide 29: US/EU companion animal parasiticide market
US/EU Companion animal parasiticide market 443 426 130 EUROPE 726 65 375 USA 105 85 EUROPE 60 182 145 USA Endo (worms) Endecto (combination) Ecto (fleas, ticks) 29
Slide 30: US/EU companion animal parasiticide market
US/EU Companion animal parasiticide market Iverhart + Iverhart Max Milpro EUROPE Effipro USA Effitix Effitix Milpro EUROPE USA Effipro Endo (worms) Endecto (combination) Ecto (fleas, ticks) 30
Slide 31: External growth
External growth • Rising multiples at unprecedented levels : - Elanco / Novartis : 4,9 x sales, 28 x EBITDA - Elanco / Lohman : undisclosed - Permira / Pharmaq : 3,8 x sales, 13,4 x EBITDA - ……. • Opportunities for Virbac : - Divestment of some Novartis assets ? - Some privately owned small/midsize
Slide 32: 2014 perspective (full year)
2014 perspective (full year) • Sales Organic Growth : 4 to 6% Forex impact : -21 M€ in H1 expected much lower in H2 • Profitability Ebit ratio close to 2013 • Debt Significant reduction in H2 32
Slide 33: Thank you
Thank you for your attention
Slide 34: Appendix: Agenda of next communication
Appendix Agenda of next communication • October 16* Q3 sales • January 15, 2015* Q4 – Full year sales * After market close
Slide 35: Disclaimer
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 th