Virbac SA · EURONEXT:VIRP
Virbac SA — H1 2013 Earnings Presentation
38 slides from Virbac SA's earnings presentation, September 2013
Slide 1: 2013 First Half Financials and Strategic Update
2013 First Half Financials and Strategic Update September 2013
Slide 2: Agenda
Agenda • First half of 2013 – Financial performance • Market evolution and Virbac growth levers
Slide 3: First half of 2013 – Key points (1/2)
First half of 2013 – Key points (1/2) • Low trends in general in the Animal Health market during this first half (fewer pathologies due to weather conditions ; economic situation in Europe, …) • Virbac revenues and profit negatively impacted by 3 factors: Decrease of Canileish sales in Europe due to
Slide 4: First half of 2013 – Key points (2/2)
First half of 2013 – Key points (2/2) • These impacts have been compensated by a significant contribution of last year acquisitions, principally Centrovet (Chile) • Increase of debt due to second instalment on Centrovet acquisition + ongoing CAPEX projects + seasonal increase of working capital 4
Slide 5: Sales evolution – First half of 2013
Sales evolution – First half of 2013 M€ +9.1% -2.2% +6.4% 380 372.0 Organic growth 370 -0.5% -7.5 31.8 360 350 349.4 8.1 -5.0 340 -4.8 330 320 1st 1st 310 half half 2012 2013 300 Iverhart CaniLeish + Acquisitions Exchange Organic growth 5 - divested OTC Rates excl. Iverhart & CaniLeish business
Slide 6: 2013 quarterly organic growth
2013 quarterly organic growth First half of 2013 3,0% 2,0% +1,3% 1,0% 189,2 M€ 0,0% 1st half -0,5% -1,0% 182,8 M€ -2,0% -2,3% -3,0% Quarter 1 Quarter 2 6
Slide 7: Sales growth by region
Sales growth by region First half of 2013 - at constant exchange rates - Europe : 147.8 M€ North America : 57.4 M€ -7.5% -0.3% Asia : 44.8 M€ Africa/Middle East : 13.3 M€ +6.9% +2.1% Latin America : 66.7 M€ Pacific : 42 M€ +136% +0.4% 7
Slide 8: Sales breakdown by region and business
Sales breakdown by region and business First half of 2013 Other Europe North America developped Emerging countries countries* 40.5% 15.4% 13.1% 31.1% Companion 55.7% 28.9% 14.8% 5.3% 6.7% animals Food producing animals 42.2% 23.6% 11.4% 7.2% Others 2.1% 8
Slide 9: Growth by segment – first half of 2013
Growth by segment – first half of 2013 Companion animals Net Growth at constant rates Organic growth Businesses / Ranges Revenue - 5% to 0% to +5% to +10% to - 5% to 0% to +5% to +10% to < - 5% > 15% < - 5% > 15% 2013 (M€) 0% +5% +10% +15% 0% +5% +10% +15% Companion Animals 207,2 -2,8% -0,5% Parasit
Slide 10: Growth by segment – Food producing animals
Growth by segment – First half of 2013 Food producing animals Net Growth at constant rates Organic growth Businesses / Ranges Revenue +10% +10% - 5% to 0% to +5% to - 5% to 0% to +5% to < - 5% to > 15% < - 5% to > 15% 2013 (M€) 0% +5% +10% 0% +5% +10% +15% +15% Food Producing Animals 157,0 27,4% 0,5
Slide 11: Consolidated profit & loss statement
Consolidated profit & loss statement First half of 2013 Million euros 2013 % 2012 % % Var. Net sales 372.0 100.0 349.4 100.0 +6.4% Margin on material cost 256.0 240.7 +6.4% Net operating expenses 199.8 184.9 +8.0% Operating profit from ordinary activities 56.2 55.8 +0.8% Non recurring (profit) or lo
Slide 12: Breakdown of EBIT growth
Breakdown of EBIT growth First half of 2013 +12.9 M€ 65 -2.8 60 -3.9 55.8 56.2 -3.6 55 -2.2 50 45 40 35 EBIT EBIT 2012 2013 30 Net margin Sales & R&D Other Exchange 12 Marketing expenses Rates
Slide 13: Breakdown of EBIT growth
Breakdown of EBIT growth First half of 2013 M€ 65 60 +11.1 55.8 56.2 55 -2.2 50 -5.9 45 -2.6 40 35 EBIT EBIT 2012 2013 30 EBIT at constant R&D Acquisitions Exchange scope and R&D at constant scope (Chile+NZ) Rates 13
Slide 14: Evolution of cash-flow
Evolution of cash-flow First half of 2013 M€ 71,0 +4.7% 70 67,8 60 53,4 +7.1% 50 49,9 40 30 Operating cash-flow 20 (« EBIT DA ») 10 Net cash-flow 0 30.06.12 30.06.13 14
Slide 15: Evolution of net debt
Evolution of net debt M€ Net Working Other assets Acquisitions Dividends Other * = Net debt Cash flow CAPEX and Capital increase liabilities 16.3 -2.0 77.0 12.4 28.3 44.6 15.2 -0.8 1.8 15.1 0 14.7 H1 2012 H1 2013 H1 2012 H1 2013 19.0 30.06.2013 30.8 15.1 -49.9 -53.4 15 * Including translation varian
Slide 16: Balance sheet analysis
Balance sheet analysis First half of 2013 661.7 661.7 M€ 157.7 445.1 445.1 Shareholder’s equity Working capital 111.7 337.7 350.8 100.0 Minority interests + LT reserves 333.3 504.0 Fixed assets 22.7 Net financial debt 84.8 210.9 06.30.12 06.30.13 06.30.12 06.30.13 INVESTED CAPITAL CAPITAL EMPLOYED 1
Slide 17: Balance sheet – financial ratios
Balance sheet – financial ratios First half of 2013 H1 2012 2012.12 H1 2013 60.1 % 38.7 % 25.1 % Net debt / Shareholder’s equity Group’s share Net debt / Net cash-flow 0.85 1.45 1.97 Net debt / Operating cash-flow 0.64 1.09 1.49 17
Slide 18: Shareholding
Shareholding Number of shares : 8 458 000 Breakdown as of June 2013 Employees Employees savings plan savings plan Treasury shares Others Others Dick Family Dick Family In shares In voting rights 18
Slide 19: Agenda
Agenda • First half of 2013 – Financial performance • Market evolution and Virbac growth levers
Slide 20: Reasons for the relatively weak performance of the first half
Reasons for the relatively weak performance of the first half Factors not specific to Virbac • Weak markets • Currency impact Factors specific to Virbac • Iverhart in the US • CaniLeish in Europe • No launch of significant new product 20
Slide 21: Animal health market growth
Animal health market growth First half of 2013 Q2 YTD Market +1,7% +1% Virbac reported ($) +11,4% +7,8% Virbac proforma ($) +2,5% -0,4% Source Vetnosis 21
Slide 22: Evolution of key selected markets
Evolution of key selected markets First half of 2013 Change vs HY 2012 +10% IND CHN BR +5% RSA NZ MX UK US, CA Market size (million 100 200 300 400 1500 €, first half 2013) JPN GER FR AUS -5% ITA -10% SP Source Ceesa Market definition : international companies 22
Slide 23: Virbac market shares gains and losses in the first half of 2013
Virbac market shares gains and losses in the first half of 2013 Change vs HY 2012 +10% IND CHN BR +5% RSA NZ MX UK US, CA Market size (million 100 200 300 400 1500 €, first half 2013) JPN GER FR AUS -5% ITA ++ + = - SP -- -10% Source Ceesa Market definition : international companies 23 7
Slide 24: 2013 Growth perspectives
2013 Growth perspectives (real terms) by geography by category 6% 6% Row 5.9% Far East 5.2% 4.1% Biology E. Europe 3.8% 3.6% Other pharma. L. America 3.1% 3% 3% 3.2% Medical feed additives Average N. America 2.4% 2.7% 1.9% Anti-infectives 1% Parasiticides W. Europe 0.5% 0% 0% Source : Vetnosis 24
Slide 25: Growth perspectives (2)
Growth perspectives (2) (real terms) by species Growth of Meat production p.a +6% 6% +2.4% Pigs 4.5% Poultry 4.3% +3.5% +2.2% Average 2.7% 3% +1.7% +2% CA/others 2% Cattle 1.9% 0% Sheep 1.7% +1.8% 0% Source : USDA, Marine Harvest, OECD-FAO 2012 outlook Source : Vetnosis 25
Slide 26: Shifts of Market Shares 2008 - 2013
Shifts of Market Shares 2008 - 2013 by geography by category by species Northern America +0.5 pt Biology +2 pt Pigs +2.5 pt Western Medical feed Europe -6 pt additives +1 pt Poultry +1 pt Latin America +0.5 pt Anti-infectives -1 pt Sheep 0 pt Far East +4 pt Parasiticides -0.5 pt Cattle -2.5 pt Compa
Slide 27: Shifts of Market Shares 2008 - 2013
Shifts of Market Shares 2008 - 2013 by geography by category by species Northern America +0.5 pt Biology +2 pt Pigs +2.5 pt Western Medical feed Europe -6 pt additives +1 pt Poultry +1 pt Latin America +0.5 pt Anti-infectives -1 pt Sheep 0 pt Far East +4 pt Parasiticides -0.5 pt Cattle -2.5 pt Compa
Slide 28: Currency impact
Currency impact • July / August average exchange rates vs first half USD £ YEN AUD ZAR INR MXP BRL CLP -0,4% -1,2% -3,1% -10,7% -8,2% -10,9% -2,7% -12,2% -6,6% • Sensitivity analysis 1% weighted average exchange rate change : 1m€ impact on EBIT 28
Slide 29: Iverhart (and US) perspectives
Iverhart (and US) perspectives Iverhart • Satisfactory result of the Iverhart Plus to Iverhart Max conversion program : 2/3 of the veterinary clinics previously customers of Iverhart Plus moved to Iverhart Max • Unsatisfactory result of the initiative to enter the pharmacy channel • Estimated declin
Slide 30: CaniLeish perspectives
CaniLeish perspectives Efficacy /safety profile of the product reinforced by the 3 years presence on the market : • Efficacy : low -and lower than expected- rate of lack of efficacy reports after 12 to 24 months of use, depending on the country • Safety : low and stable incidence of side effects 201
Slide 31: New product launches
New product launches European program in line with earlier forecasts One project delayed by 6 months in the US portfolio ROW key projects portfolio in line with earlier forecasts 31
Slide 32: Combined estimated peak sales of main projects, by launch year
Combined estimated peak sales of main projects, by launch year (excluding Centrovet’s projects) September 2013 34m€ 3 Dermatology 26m€ Vaccines 23m€ Dermatology Parasiticides 10 Dermatology 22 10 Parasiticides internal and external 22 Cardio 19 16 Dermatology 19 Parasiticides Bovine Anaesthetics par
Slide 33: Aquaculture: a major growth opportunity for Virbac (1)
Aquaculture : a major growth opportunity for Virbac (1) Reminder : key reasons for investing in aquaculture : Benefits of farmed fish vs other species - highest feed conversion rate - highest edible yield - more efficient use of space → highest production growth in the last decade, highest growth al
Slide 34: Aquaculture: a major growth opportunity for Virbac (2)
Aquaculture : a major growth opportunity for Virbac (2) Virbac/ Centrovet short term perspectives H1 growth rate (+ 6%) may accelerate in H2 due to a new outbreak of SRS Significant innovation expected early next year 34
Slide 35: M&A activity
M&A activity Imminent acquisition of the remaining 70% of Santa Elena shares (Uruguay) • Full year impact : sales + 9 m€ EBIT + 1.5 m€ • Cash consideration : 12.5 m€ (potential complement in 2016/2017) Two small deals likely before the end of the year 35
Slide 36: 2013 Financial perspective
2013 Financial perspective Sales Double digit growth at constant exchange rates Profit Double digit growth of the current operating profit (at first half year exchange rates), but dependent on € parity vs a basket of key currencies for Virbac (US $, AUD, £, C. peso, Mex peso, INR, ZAR, …) Slight dec
Slide 37: 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
Slide 38: Thank you
Thank you for your attention