Virbac SA · EURONEXT:VIRP
Virbac SA — FY2013 Earnings Presentation
64 slides from Virbac SA's earnings presentation, March 2014
Slide 1: 2013 Financials and Strategic Update
2013 Financials and Strategic Update March 2014
Slide 2: Key points on 2013 financial performance (1/2)
Key points on 2013 financial performance (1/2) Growth of revenue : +5.9% Growth of EBIT : +6.9% : +2.1% organically Decrease of net earnings : -9.2% • Lower trends in general in the animal health market, especially in the first half (weather conditions ; economic slow-down) • Virbac revenues and pro
Slide 3: Key points on 2013 financial performance (2/2)
Key points on 2013 financial performance (2/2) • Decrease of net profit – Group share : impact of 49% minority interests in Centrovet • Debt increase following : payment of price complements on 2012 acquisitions; modest generation of free cash-flow due to high level of Capex + increase of working ca
Slide 4: Agenda
Agenda • 2013 results • Virbac strategic perspectives • Appendix 4
Slide 5: Consolidated sales
Consolidated sales 31.12.2013 Million euros 2013 2012 Var. % Consolidated sales 736.1 695.2 +5.9% - exchange rate impact vs. 2012 (32.3) - Consolidated sales at constant rates 768.4 695.2 +10.5% - change of perimeter (69.4) (10.5) Consolidated sales, pro-forma at constant exchange rates 698.9 684.6
Slide 6: 2013 quarterly growth of sales
2013 quarterly growth of sales* * Pro forma sales, excluding impact of exchange rates 8% +7.5% 7% 6% 5% 4% 3% +2.1% 2% Year :+2.1% +1.3% 1% 0% 189.2 M€ 183.4 M€ 180.7 M€ 182.8 M€ -1% -2% -3% -2.3% Q1 Q2 Q3 Q4 6
Slide 7: Sales evolution
Sales evolution M€ 2013 +8.5% -4.7% 770 Organic growth 750 +2.1% +5.9% 58.9 736.1 730 -32.3 710 35.3 -16.8 695.2 -4.2 690 670 650 630 610 2012 2013 Iverhart CaniLeish + Acquisitions Exchange Organic growth - divested OTC Rates excl. Iverhart & CaniLeish business 7
Slide 8: Sales growth by region
Sales growth by region 2013 - at constant scope - North America : Europe : 300.8 M€ 101.8 M€ -0.5% -5% Asia : 89.5 M€ Africa/Middle East : +9.7% 29.4 M€ Latin America : +12% Pacific : 135.5 M€ 79.0 M€ +17.4% -2.7% 8
Slide 9: Growth by segment 2013: Companion animals
Growth by segment 2013 Companion animals At constant exchange rates Growth at constant rates Organic growth Net Businesses / Ranges Revenue +5% +10% +5% +10% - 5% to 0% to - 5% to 0% to 2013 (M€) < - 5% to to > 15% < - 5% to to > 15% 0% +5% 0% +5% +10% +15% +10% +15% Companion Animals 403,6 -1,6% 0,
Slide 10: Growth by segment 2013: Food producing animals
Growth by segment 2013 Food producing animals At constant exchange rates Growth at constant rates Organic growth Net Businesses / Ranges Revenue +5% +10% +5% +10% - 5% to 0% to - 5% to 0% to 2013 (M€) < - 5% to to > 15% < - 5% to to > 15% 0% +5% 0% +5% +10% +15% +10% +15% Food Producing Animals 316,
Slide 11: Sales breakdown by region and business 2013
Sales breakdown by region and business 2013 North Other developped Emerging Europe America countries* countries 41.8% 13.8% 12.7% 31.7% (45.8%) (15.8%) (15.3%) (23.1%) 5.6% 6.9% Companion 29.1% 13.2% 54.9% (6.3%) animals (7.4%) (32.1%) (15.1%) (61%) Food producing 43% 12.3% 6.4% 24.3% animals (37%)
Slide 12: 2013 Profit & Loss statement
2013 Profit & Loss statement 31/12/2013 % 31/12/2012 % Variation en M€ Net sales 736,1 100,0 695,2 100,0 5,9% Margin on material costs 505,2 478,3 5,6% (Increase) decrease of inventory reserves 0,5 -1,4 Gross margin on material cost 504,7 68,6 479,7 69,0 5,2% External expenses 159,0 21,6 158,7 22,8
Slide 13: Breakdown of EBIT growth in 2013
Breakdown of EBIT growth in 2013 M€ +32.6 130 -2.1 120 -7.0 110 -8.3 104.9 100 98.1 -8.4 90 80 70 EBIT EBIT 60 2012 2013 Net margin Sales & Marketing R&D Other expenses Exchange rates 13
Slide 14: Breakdown of EBIT growth in 2013
Breakdown of EBIT growth in 2013 M€ 120 110 +24.0 104.9 100 98.1 90 -4.5 -4.6 80 -8.1 70 60 EBIT EBIT 50 2012 2013 EBIT at R&D at Acquisitions constant scope constant scope Exchange rates (Chile+NZ+Ur.) and R&D 14
Slide 15: Update on Centrovet (Chile)
Update on Centrovet (Chile) • 92 M USD sales in 2013 11.5% growth vs. 2012, essentially in Aquaculture Aquaculture represents 73% of total revenue (68% in 2012) • Acquisition price : 119.8 M.USD revised from original estimate booked in 2012 (96.6 M.USD) to reflect 2012-2013 performance • Accounting
Slide 16: Evolution of cash-flows
Evolution of cash-flows M€ 140 135.0 +9.4% 123.5 120 100 98.1 +6.1% 92.5 80 60 40 Operating cash-flow (« EBIT DA ») 20 Net Cash-flow 0 2012 2013 16
Slide 17: 2013 Cash-flow statement
2013 Cash-flow statement (million euros) Sources of funds Uses of funds Cash-flow 98.1 Intangible assets 4.5 Sale of assets 0.4 Tangible assets 54.8 Dividends 17.0 Purchase of treasury shares 0.6 Working capital 29.8 Acquisitions 36.1 Variation of debts related to acquisitions -2.0 Other 1.8 Total S
Slide 18: Evolution of free cash-flow
Evolution of free cash-flow M€ 100 98.1 92.5 90 80 70 +2.1 58.7 60 50 -35.9 40 -59.3 30 20 10 9.0 -29.8 0 Free Net cash- CAPEX Working Free Net cash- CAPEX Working flow capital cash- flow capital cash- flow flow 2012 2013 18
Slide 19: Evolution of net debt
Evolution of net debt M€ 200 37.0 178.1 34.2 150 16.2 103.5 133.9 2.8 Debt from acquired entities -9.0 100 69.7 83.5 50 Debt from acquired entities 19.4 20.0 -58.7 Net debt Free Dividends Acquisitions/ Net debt Free Dividends Net debt Acquisitions Dec 2011 cash-flow & Other Divestiture Dec 2012 cash
Slide 20: Balance Sheet analysis
Balance Sheet analysis (million euros) 642.8 642.8 578.1 105.0 578.1 Working Capital 78.6 360.9 Shareholder ’s equity 346.2 499.5 537.8 Fixed assets Minority interests 103.8 + LT reserves 98.0 178.1 Net financial 133.9 debt 2012 2013 2012 2013 INVESTED CAPITAL CAPITAL EMPLOYED 20
Slide 21: Balance sheet – financial ratios
Balance sheet – financial ratios 2011.12 2012.12 2013.12 49.3% 38.7% 22.4% Net debt / Shareholder’s equity Group’s share Net debt / Net cash-flow 0.87 1.45 1.82 Net debt / Operating cash-flow 0.65 1.27 1.32 21
Slide 22: Shareholding
Shareholding Number of shares : 8 458 000 0,4% Treasury shares Employees savings plan Employees savings plan 0,9% Others Others 49,0% 49,7% Dick Family Dick Family In shares In voting rights 22
Slide 23: Agenda
Agenda • 2013 results • Virbac strategic perspectives • Appendix 23
Slide 24: Virbac turnover by species
VIRBAC TURNOVER BY SPECIE 2013 55% 27% 9% 2% 7% others 24
Slide 25: Largest segment of the animal health market: companion animals
LARGEST SEGMENT OF THE ANIMAL HEALTH MARKET 39% Companion animals 9 400 M$ 24 000 M$ 25
Slide 26: Virbac worldwide positions
VIRBAC WORLD WIDE POSITIONS Market shares 2009 2013 Europe 8,4% 9,6% North America 3,0% 3,9% Asia / Pacific 7,8% 8,5% Latin America 12,2% 12,3% TOTAL 5,5 % 6,5 % Source Ceesa 26
Slide 27: Virbac worldwide market shares
VIRBAC WORLD WIDE MARKET SHARES 10% 5% 0% 0% Equine Internal parasiticides NSAIDS Cardio parasiticides 5% antibiotics 18% other specialties 4% 8% External parasiticides Vaccines 27
Slide 28: Virbac strengths: strong brands
VIRBAC STRENGTHS Strong brands >10 M$ Vaccines Parasiticides Other specialties Canigen Iverhart EasOtic Feligen Effipro Epi-Otic Leucogen Equimax Zoletil CaniLeish Suprelorin 28
Slide 29: Leader in specific markets
LEADER IN SPECIFIC MARKETS 35% market share 23% market share Topicals Hormones EasOtic Suprelorin - Europe Epi-Otic Soloxine – United states 29
Slide 30: Largest segment of food producing animals market: ruminants
LARGEST SEGMENT OF FOOD PRODUCING ANIMALS MARKET 27 % Ruminants 24 000 M$ 6 500 M$ 30
Slide 31: Ruminants - wide diversity
RUMINANTS - WIDE DIVERSITY End products Meat Milk Mixed (small ruminants) Meat & milk Types of breeding Meat Milk Extensive/intensive Zero grazing / grazing 31
Slide 32: Ruminants - wide diversity
RUMINANTS - WIDE DIVERSITY Size of farms Productivity Production cost from 3 to from 2,5L of milk/day/cow from 1,5 $/kg 100 000 cows to 45L/day to 5,4 $/kg 32
Slide 33: Virbac strengths: rankings
VIRBAC STRENGTHS N° °4 in France N° °5 In ‘‘emerging’’ markets 33
Slide 34: Virbac strengths: umbrella and specific brands
VIRBAC STRENGTHS Virbac umbrella brand Strong specific brands >10 M$ Ostovet (India) Cydectin (Australia) Shotapen Virbamec 34
Slide 35: New opportunities in vaccines
VIRBAC STRENGTHS New opportunities in vaccines • Australia • Latin America 35
Slide 36: Manufacturing units up to date
VIRBAC STRENGTHS VB8 - Carros New up Guadalajara to date Manufacturing units Montevideo 36
Slide 37: Aquaculture - fast growing segment
AQUACULTURE - FAST GROWING SEGMENT 3,5% Aquaculture 800 M$ 24 000 M$ 37
Slide 38: Few players
FEW PLAYERS Top 10 Animal health 2012 turnover M$ 38
Slide 39: Production of animal proteins by species
PRODUCTION OF ANIMAL PROTEINES BY SPECIE Bovine Swine Poultry Sheep Aquaculture Fishing Food conversion rate 0,83 0,5 0,33 0,125 39
Slide 40: Cold water animal health market
COLD WATER ANIMAL HEALTH MARKET Feroe Scotland islands Canada 22 M$ 7 M$ 20 M$ Chile Norway 150 M$ 350 M$ 152 M$ 40
Slide 41: Warm water animal health market
WARM WATER ANIMAL HEALTH MARKET Indonesia 41 M$ China Vietnam 71 M$ 39 M$ 250 M$ Thailand 20 M$ Others India 63 M$ 16 M$ 41
Slide 42: Main players
MAIN PLAYERS Estimated turnover Oral vaccines technology 42
Slide 43: Swine – key market in Asia
SWINE – KEY MARKET IN ASIA 17% Swine 4 100 M$ 24 000 M$ 43
Slide 44: Fast growing market
FAST GROWING MARKET M$ 4 100 M$ 44
Slide 45: Growing share of vaccines
GROWING SHARE OF VACCINES 30% Virbac objectives Development of a vaccine range Focus on Asia Market entry from 2016 45
Slide 46: Impact of key factors on Virbac performance
IMPACT OF KEY FACTORS ON VIRBAC PERFORMANCE 2012 2013 Markets Foreign exchanges New products Regulatory/ Compliance Acquisitions 46
Slide 47: Impact of key factors on Virbac performance
IMPACT OF KEY FACTORS ON VIRBAC PERFORMANCE 2012 2013 2014 2015 Markets Foreign exchanges New products Regulatory/ Compliance Acquisitions 47
Slide 48: Impact of key factors on Virbac performance
IMPACT OF KEY FACTORS ON VIRBAC PERFORMANCE 2012 2013 2014 2015 Markets Foreign exchanges New products Regulatory/ Compliance Acquisitions 48
Slide 49: Market growth
MARKET GROWTH 2012 2013 +3,9% +2,6% Europe +1,7% +0,5% +0,4% 0% +7,5% +6,2% +5,1% +3,6% United States +1,7% +0,6% Source CEESA, Virbac analysis at constant scope 49
Slide 50: Impact of key factors on Virbac performance
IMPACT OF KEY FACTORS ON VIRBAC PERFORMANCE 2012 2013 2014 2015 Markets Foreign exchanges New products Regulatory/ Compliance Acquisitions 50
Slide 51: Innovation in companion animal
INNOVATION IN COMPANION ANIMAL Turnover by year of launch 2008/2009 23 M€ 8 M€ 9 M€ 51
Slide 52: Innovation in companion animal
INNOVATION IN COMPANION ANIMAL Turnover by year of launch 2011 9 M€ (2013) 13 M€ (2012) 52
Slide 53: Estimated turnover of new products: companion animals
ESTIMATED TURNOVER OF NEW PRODUCTS Companion animals 10 M€ Dermatology 2015 Urology 30 M€ Internal and external parasiticides 2014 53
Slide 54: Estimated turnover of new products: food producing animals
ESTIMATED TURNOVER OF NEW PRODUCTS Food producing animals 10 M€ Bovine Vaccines ROW Metabolism Parasiticides 10 M€ Bovine Europe Parasiticides Antibiotics 54
Slide 55: Impact of key factors on Virbac performance
IMPACT OF KEY FACTORS ON VIRBAC PERFORMANCE 2012 2013 2014 2015 Markets Foreign exchanges New products Regulatory/ Compliance Acquisitions 55
Slide 56: Regulatory / Compliance
REGULATORY / COMPLIANCE Major efforts to keep up with requirements started in 2010 - headcount - plants and equipment (France, Mexico injectable plants…) - processes, training etc… Context: strengthening of regulation requirements and agencies means and skills (especially in Europe, but worldwide tr
Slide 57: Regulatory / Compliance: cost impact
REGULATORY / COMPLIANCE Cost impact started in 2012, significant cost (R&D, production, CAPEX) and revenue impact in 2013 (Iverhart Plus withdrawal, some product losses in Europe) Need of incremental resources and efforts gradually decreasing from 2014 Positive impact: increase of barriers to entry
Slide 58: Impact of key factors on Virbac performance
IMPACT OF KEY FACTORS ON VIRBAC PERFORMANCE 2012 2013 2014 2015 Markets Foreign exchanges New products Regulatory/ Compliance Acquisitions 58
Slide 59: Recent multiples in M&A in animal health
RECENT MULTIPLES IN M&A IN ANIMAL HEALTH Recent multiples in M&A in animal health Pharmaq / Permira (March 2013): 13.4 x EBITDA Sogeval / Ceva (December 2013): >12 x EBIT Lohmann / Elanco (February 2014): 13 x EBITDA Bioniche / Vetoquinol (February 2014): 12 x EBIT 59
Slide 60: 2014 Financial perspectives
2014 FINANCIAL PERSPECTIVES Sales Organic growth in the 4% to 6% range Profit Stability of the Group EBIT ratio Double digit growth of R&D expenses Debt Debt/equity ratio back to the 40% range (excluding acquisitions) 60
Slide 61: Agenda
Agenda • 2013 results • Virbac strategic perspectives • Appendix 61
Slide 62: Appendix: financial calendar
Appendix • April 15* Q1 sales • June 17 Annual shareholders’ meeting • June 25 Payment of 2013 dividend • July 17* Q2 – H1 sales • August 29* Half-year financial results • October 16* Q3 sales • January 15, 2015* Q4 – Full year sales * After market close 62
Slide 63: Thank you
Thank you for your attention
Slide 64: 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