Virbac SA · EURONEXT:VIRP
Virbac SA — H1 2017 Earnings Presentation
38 slides from Virbac SA's earnings presentation, September 2017
Slide 1: H1 2017 results & perspectives
H1 2017 results & perspectives September 2017
Slide 2: Agenda
AGENDA 2017 half year results 2017 perspectives 2018 and beyond Appendix : 2017 agenda 2
Slide 3: 2017 Financials – Summary (1/2)
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 H1 201
Slide 4: 2017 Financials – Summary (2/2)
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 debt @ 543 M€ vs. 547 M€ at December 2016 • No dividend paid o
Slide 5: Exchange rates H1 2017
EXCHANGE RATES H1 2017 Weighted average exchange rates USD GBP JPY MXN AUD ZAR BRL INR CHF CLP Actual 2016 1.11 0.78 123.3 20.2 1.52 17.2 4.11 75.0 1.10 770.5 Actual 2017 1.10 0.86 122.0 20.9 1.44 14.3 3.44 71.0 1.08 713.8 Variance A17/A16 1.6% -9.6% 1.1% -3.4% 5.7% 20.3% 19.4% 5.6% 1.7% 8.0% Weight
Slide 6: Consolidated sales H1 2017
CONSOLIDATED SALES H1 2017 Million euros 2017 2016 Var.% Consolidated sales 437.5 430.0 +1.8% - Exchange rate impact vs 2016 -9.7 Consolidated sales at constant rates 427.8 430.0 -0.5% - Change in perimeter 0.0 Consolidated sales, pro-forma at 427.8 430.0 -0.5% constant exchange rates 6
Slide 7: Sales evolution H1 2017
SALES EVOLUTION H1 2017 M€ 9.7 5.8 -8.8 0.8 437.5 430.0 7.6 M€ (1.8%) at actual rates -2.1 M€ (-0.5%) at constant rates A 2016 Europe ROW US Exchange rates A 2017 8
Slide 8: Sales growth by region
SALES GROWTH BY REGION H1 2017 at constant rates North America 64.7 M€ 170.1 M€ Europe -12.0% +0.5% Asia 69.6 M€ Africa/Middle East +7.9% 16.0 M€ Latin America -4.6% Pacific 73.5 M€ 43.6 M€ +3.6% -2.1% 9
Slide 9: Sales growth by segment: companion animals
SALES GROWTH BY SEGMENT COMPANION ANIMALS H1 2017 at constant rates A 2016 252.2 Parasiticides 45.6 (-20%) - 11.3 Endectocides 40 (-6.4%) - 2.7 Antibiotics/Dermatology 34.4 (1.2%) 0.4 Biologicals 34.4 (-8.4%) - 3.2 Other 31.8 (1.5%) 0.5 Specialties 29.5 (14.2%) 3.6 Petfood 15.4 (4.1%) 0.6 Horses 10.
Slide 10: Sales growth by segment: food producing animals
SALES GROWTH BY SEGMENT FOOD PRODUCING ANIMALS H1 2017 at constant rates A 2016 173.1 Other bovine products 63.6 (4.2%) 2.4 Bovine antibiotics 33.2 (4.2%) 1.3 Aquaculture 28.4 (-0.4%) - 0.1 Bovine parasiticides 27.7 (11.3%) 2.7 Antibiotics swine/poultry 21.9 (1.6%) 0.3 Other swine/poultry 13.4 (8.8%
Slide 11: Sales breakdown by region and business
SALES BREAKDOWN BY REGION AND BUSINESS H1 2017 Other developped Europe North America countries* Emerging countries 39.6% 14.8% 11.9% 33.7% (40.8%) (16.8%) (11.9%) (30.4%) Companion Animals 55.3% 7.7 % 28.6 % 14.5 % 4.5 % (58.7%) (5.0%) (6.6 %) (30.2 %) (16.8 %) Food Producing Animals 43.0% (40.3%) 1
Slide 12: Breakdown of EBIT adjusted evolution
BREAKDOWN OF EBIT ADJUSTED EVOLUTION H1 2017 M€ 1,9 -2,3 1,4 -2,6 2,0 0,6 40,7 39,7 13
Slide 13: 2017 Profit & loss statement
2017 PROFIT & LOSS STATEMENT H1 2017 30/06/2017 % 30/06/2016 % Variation in M€ Net sales 437.5 100.0 430.0 100.0 1.8% Gross margin on material cost 286.6 65.5 287.3 66.8 -0.3% External expenses 89.4 20.4 95.9 22.3 -6.8% Personnel expenses 136.4 31.2 135.4 31.5 0.8% Other expenses 5.9 1.4 4.5 1.0 32.
Slide 14: Evolution of cash-flow
EVOLUTION OF CASH-FLOW H1 2017 M€ 52.0 56.1 +7.8% 35.2 31.5 -10.5% Operating cash-flow Net cash-flow 30.06.2016 30.06.2017 15
Slide 15: Use of funds
USE OF FUNDS H1 2017 M€ Net cash flow Capex Working capital Dividends Acquisitions Other1 = net debt increase Free Cash Flow H1.2017 : + 21.5 H1.2016 : - 2.9 35.0 1.7 -27.3 1.7 -4.2 2.3 0 12.2 2.3 20.1 18.0 -31.5 -35.2 H1.2016 H1.2017 H1.2016 H1.2017 16 1. Including translation variance
Slide 16: Evolution of net debt
EVOLUTION OF NET DEBT H1 2017 M€ Net debt Net Cash Capex Working Acquisitions Dividends Others Net debt opening flow Capital closing 35.0 0.0 1.7 18.0 547.1 543.0 -27.3 -31.5 30.06.2017 31.12.2016 31.12.2016 31.12.2015 17
Slide 17: Balance sheet analysis
BALANCE SHEET ANALYSIS H1 2017 1 159.2 1 121.5 1 159.2 M€ 1 121.5 237.8 Working capital 217.7 Shareholder’s equity 443.0 471.9 109.4 Minority interests 921.4 903.8 + LT reserves Fixed assets 106.6 606.8 543.0 Net financial debt 30/06/2016 30/06/2017 30/06/2016 30/06/2017 INVESTED CAPITAL CAPITAL EMP
Slide 18: Balance sheet – financial ratios
BALANCE SHEET – FINANCIAL RATIOS 2016.06 2016.12 2017.06 137.0 % 115.5 % 115.1 % Net debt/Shareholder’s equity Group’s share 8.6 7.6 8.6 Net debt/Net cash-flow 5.8 4.9 4.8 Net debt/Operating cash-flow 19
Slide 19: Shareholding
SHAREHOLDING Number of shares : 8 458 000 In Shares In Voting Rights Treasury Treasury shares shares 0.0% 0.3% Public Public Dick Family 33.1% 49.1% 49.7% Employees Dick Family savings plan 65.7% Employees 1.2% savings plan 0.9% 20
Slide 20: Agenda
AGENDA 2017 half year results 2017 perspectives 2018 and beyond Appendix : 2017 agenda 21
Slide 21: The Virbac roadmap
THE VIRBAC ROADMAP 2005-2014 2015-2017 2018 … « Roaring decade » « Setback and « Back to growth » recovery » 22
Slide 22: USA: 2017 perspectives
USA : 2017 PERSPECTIVES • Revenues Share of H1 2017 Group sales Ex-Virbac sales will decline for the full year: the ex- 14.8% distributors sales growth will be too low to offset the $25 million stocking of 2016. - In the first half these growth rates are respectively -12% and around +5% - Iverhart
Slide 23: Iverhart quarterly shares of US internal parasiticides market for dogs
IVERHART QUATERLY SHARES OF THE US INTERNAL PARASITICIDES MARKET FOR DOGS 3% 2% 1% 0% Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Delivered doses (ex distributors) Dispensed doses (ex clinics) 24 Source Kynetec
Slide 24: US market shares internal parasiticides for dogs
US MARKET SHARES INTERNAL PARASITICIDES FOR DOGS Dispenses $ MAT 40% 30% 33% 33.3% 29% 24.5% 20% 10% 14.4% 13.1% 9% 7.8% 6.9% 0% 1.8% December 15 June 16 December 16 June 17 Sentinel Brand 1 Brand 2 Brand 3 Brand 4 Source Kynetec
Slide 25: Current and future status of legacy products manufactured in St. Louis plant
CURRENT AND FUTURE STATUS OF LEGACY PRODUCTS MANUFACTURED IN THE ST. LOUIS PLANT Number of products sourced from Share of ex St. Louis St. Louis, sold in 2014 2014 net sales 57 100% 6% Discontinued 7% 20 10 % 22 % 5% 2019 1 Expected RTC 2018 6 2017 7 72 % RTC* as of June 30, 2017 23 * Returned to co
Slide 26: Aquaculture: 2017 perspectives
AQUACULTURE : 2017 PERSPECTIVES Share of H1 2017 Group sales • Some growth expected in Chile, uncertainty seems to 8.6% decrease 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 Pha
Slide 27: Europe: 2017 perspectives
EUROPE : 2017 PERSPECTIVES Share of H1 2017 Group sales Moderate growth expected, both in companion animals 38.9% and food producing animals Growth drivers in companion animals : - Petfood :roll out of Veterinary HPM Preventive, launch of HPM Diet - Suprelorin, Easotic Growth drivers in food p
Slide 28: Latin America/Asia/Pacific: 2017 perspectives
LATIN AMERICA/ASIA/PACIFIC : 2017 PERSPECTIVES Share of H1 2017 Group sales Significant growth expected 36.2% Double digit growth expected in many markets : - Brazil - China (CA, digital initiative) - Some emerging markets Rebound expected in India in the second semester after the implementation
Slide 29: 2017 updated perspectives – summary
2017 UPDATED PERSPECTIVES – SUMMARY • 2017 net sales : around 2016 level @ constant rate (2017 Q3 net sales growth negative @ constant rate) • EBIT adjusted1 ratio2 : around 2016 level @ constant rate • Debt reduction : 30 to 50 M€ (no dividends paid by Virbac SA) 1. EBIT Adjusted : Current Operatin
Slide 30: Agenda
AGENDA 2017 half year results 2017 perspectives 2018 and beyond Appendix : 2017 agenda 31
Slide 31: The Virbac roadmap
THE VIRBAC ROADMAP 2015-2017 2005-2014 2018 … « Setback and « Roaring decade » « Back to growth » recovery » 32
Slide 32: 2018 and beyond: growth factors and profitability improvement opportunities
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 Senti
Slide 33: Across the board
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 contr
Slide 34: Estimated peak sales potential of the main innovation projects
ESTIMATED PEAK SALES POTENTIAL OF THE MAIN INNOVATION PROJECTS ( September 2017) Launch Companion Animals M€ Food Producing Animals M€ Year • Dermatology (USA/Japan) • Swine vaccine (Asia) • Anti infectious (Europe) • Internal parasiticides for ruminants (Pacific) 2018 • Dental (USA/Europe) 27 10 •
Slide 35: Thank you
Thank you for your attention Shaping the future of animal health
Slide 36: Agenda
AGENDA 2017 half year results 2017 perspectives 2018 and beyond Appendix : 2017 agenda 37
Slide 37: 2017 Agenda
2017 AGENDA April 12* Q1 sales June 23 Annual shareholders’ meeting July 17* Q2 – H1 sales September 11* Half-year financial results October 12* Q3 sales January 16, 2018* Q4 – Full year sales * After market close 38
Slide 38: 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