Virbac SA · EURONEXT:VIRP

Virbac SA — H1 2020 Earnings Presentation

39 slides from Virbac SA's earnings presentation, September 2020

  1. Slide 1: 2020 half year results & perspectives

    2020 half year results & perspectives June 29, 2020 September,2020 Shaping the future of animal health

  2. Slide 2: 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

  3. Slide 3: Agenda

    AGENDA 2020 half year results Strategy execution & perspectives Appendix : 2020 agenda 3

  4. Slide 4: Financials – Summary (1/4)

    FINANCIALS – SUMMARY (1/4) H1 2020 • Organic growth of 5.0% @constant rates • Driven by all areas and a strong sector resilience with some anticipated buy-in in the 1st quarter followed by an expected weaker 2nd quarter • Sales increase in the USA (+3.1% @ constant rate) • Higher Sentinel sales (+11

  5. Slide 5: Financials – Summary (2/4): average exchange rates

    FINANCIALS – SUMMARY (2/4) H1 2020 Average rates USD GBP JPY MXN AUD ZAR BRL INR CHF CLP A 2019 1.13 0.87 124 21.6 1.60 16.0 4.35 79.0 1.13 762 A 2020 1.10 0.87 119 23.6 1.68 18.2 5.45 81.4 1.06 898 Variance A20/A19 2.6% 1.0% 4.4% -8.4% -4.9% -12.1% -20.2% -2.8% 6.1% -15.2% Average rates NZD COP CRC

  6. Slide 6: Financials – Summary (3/4)

    FINANCIALS – SUMMARY (3/4) H1 2020 • Net profit : 49.7 M€ (vs. 28.4 M€ in 2019) @ real rate impacted by: • + Higher level of sales – with favorable product mix (i.e. Sentinel) • + Opex savings (one-off) due to Covid-19 situation • + Decrease of the net cost of financing • - Unfavorable exchange rate

  7. Slide 7: Consolidated sales (4/4)

    CONSOLIDATED SALES (4/4) H1 2020 Million euros 2020 2019 Var.% Consolidated sales 478.3 463.7 +3.1% - Exchange rate impact vs. 2019 8.4 Consolidated sales at constant rates 486.7 463.7 +5.0% - change in perimeter 0.0 Consolidated sales, pro-forma at 486.7 463.7 +5.0% constant exchange rates 7

  8. Slide 8: Sales evolution

    SALES EVOLUTION H1 2020 5.1% 3.1% 10.7 2.3 -8.4 M€ 5.5% 10.0 478.3 463.7 14.6 M€ (3.1%) at actual rates 23 M€ (5%) at constant rates A 2019 Europe ROW US Exchange rates A 2020 8

  9. Slide 9: Sales growth by region

    SALES GROWTH BY REGION H1 2020 At constant rates Europe North America 191.6 M€ 77.1 M€ +5.5% +3.1% Asia 75.4 M€ +0.1% Africa/Middle East 14.8 M€ Latin America +4.9% 78.2 M€ +9.3% Pacific 41.1 M€ +6.6% 9

  10. Slide 10: Sales growth by segment - Companion animals

    SALES GROWTH BY SEGMENT - COMPANION ANIMALS H1 2020 At constant rates A 2019 270.4 Parasiticides 86.4 (9.1%) 7.2 (+3.8 /+7.9% without Sentinel) Other 54.8 (2.1%) 1.0 Antibiotics/Dermatology 40.6 (2.7%) 1.1 Specialties 43 (12.8%) 4.9 Biologicals 29.7 (-17%) - 6.1 Petfood 29.6 (26.9%) 6.3 Exchange rat

  11. Slide 11: Sales growth by segment - Food producing animals

    SALES GROWTH BY SEGMENT - FOOD PRODUCING ANIMALS H1 2020 At constant rates A 2019 49.8 (9.7%) 186.4 Antibiotics 49.8.0 (9.7%) 4.6 Antiparasiticides 36.2 (8.3%) 2.9 Bovine, Swine & Nutritionals 31.2.0 (-0.7%) - 0.2 Poultry Other 22.3 (-4.6%) - 1.1 Vaccines 21.6 (13.7%) 2.7 Aquaculture 28 (3.8%) 1.0 E

  12. Slide 12: Sales breakdown by region and business

    SALES BREAKDOWN BY REGION AND BUSINESS H1 2020 Other developped Europe North America countries* Emerging countries 40.3% 16.1% 11.2% 32.4% (39.3%) (15.7%) (11.3%) (33.7%) Companion Animals 59.4% 30.3 % 15.7 % 5.0 % 8.3 % (58.3%) (29.6 %) (15.2 %) (4.6%) (9.0 %) Food Producing 23.7% Animals 39.5% 9.8

  13. Slide 13: Sentinel divestment accounting impacts

    SENTINEL DIVESTMENT ACCOUNTING IMPACTS • In the consolidated financial statements of June 30, 2020, the Sentinel transaction is treated in accordance with IFRS 5 "Assets held for sale" The 3 criteria of the standard (IFRS 5 § 2 to 5) are met: • the assets are available for immediate sale in their cu

  14. Slide 14: Profit & loss statement at real rates

    PROFIT & LOSS STATEMENT AT REAL RATES H1 2020 2020 % 2019 % in M€ Net sales 478.3 100.0 463.7 100.0 Gross margin on material cost 322.4 67.4 311.2 67.1 Net expenses 217.9 45.6 224.3 48.4 Amortizations, depreciations and provisions 19.0 4.0 20.0 4.3 Current operating profit before depreciation of ass

  15. Slide 15: Breakdown of Ebit adjusted evolution

    BREAKDOWN OF EBIT ADJUSTED1 EVOLUTION H1 2020 M€ 4.5 -3.7 2.9 7.3 2.6 5.0 85.5 66.9 2 1 Ebit adjusted : current operating profit before depreciations of assets arising from acquisitions 2 RDL : Research, Development & Licensing 15

  16. Slide 16: Contribution of the US operations to the Ebit adjusted

    CONTRIBUTION OF THE US OPERATIONS TO THE EBIT ADJUSTED1 H1 2020 M$ 3.2 1.9 Excluding R&D -1.8 2019 one-off gains : - Sale of Fort Worth & impact of car lease - Travel, meetings, Advertising & Promotional savings 20.7 17.4 A 2019 Margin Improvement One-Off gain on 2019 OPEX OPEX decrease A 2020 (Volu

  17. Slide 17: Evolution of cash-flow

    EVOLUTION OF CASH-FLOW H1 2020 M€ +26.4% Operating cash flow 104.2 Net cash flow 82.4 75.2 +23.0% 61.2 2019 2020 17

  18. Slide 18: Evolution of free cash-flow

    EVOLUTION OF FREE CASH-FLOW H1 2020 2019.06 2020.06 M€ 12.5 12.2 42.7 75.2 61.2 1.5 46.3 20.0 18.5 2.6 2.1 0.6 18

  19. Slide 19: Evolution of net debt

    EVOLUTION OF NET DEBT H1 2020 M€ 0.0 1.5 5.1 75.2 3.4 3.5 42.7 12.5 368.4 348.2 Closing net debt @ constant rates 351.7 M€ Opening net Net cash flow Capex WCR Acquisitions Dividends Other items* Non cash Conversion Closing net debt impacts ** gains & losses debt * whereas change in financial assets

  20. Slide 20: Balance sheet analysis

    BALANCE SHEET ANALYSIS H1 2020 984.9 M€ 986.6 M€ 984.9 M€ 986.6 M€ 125.1 289.5 348.2 368.4 150.9 90.4 98.7 859.7 546.2 517.8 548.0 2019.12 2020.06 2019.12 2020.06 Fixed assets Net financial debt Working capital Non controlling interests + LT reserves Assets held for sale Shareholder's equity INVESTE

  21. Slide 21: Balance sheet – financial ratios

    BALANCE SHEET – FINANCIAL RATIOS H1 2020 2019.06 2019.12 2020.06 Net debt/Shareholder’s equity 93.2% Group’s share 71.2% 63.5% 3.7 Net debt/Net cash-flow1 3.5 2.3 2.8 Net debt/Operating cash-flow1 2.4 1.7 1 For the calculation as at end of June, net cash flow and operating cash flow are multiplied b

  22. Slide 22: Shareholding

    SHAREHOLDING Number of shares: 8 458 000 In shares In Voting Rights Treasury shares Treasury 0.0% shares Public 0.3% Public Dick Family 36.0% 49.5% 49.6% Dick Family 63.2% Employees Employees savings plan savings plan 0.8% 0.6% 22

  23. Slide 23: Agenda

    AGENDA 2020 half year results Strategy execution & perspectives Appendix : 2020 agenda 23

  24. Slide 24: Choosing sustainability: roadmap to sustainable growth

    « CHOOSING SUSTAINABILITY»: ROADMAP TO SUSTAINABLE GROWTH Come-back Transition Run 2018-2019 2020-2022 2023-2025 Focus on organic growth Divestment of Sentinel (loss of Focus on organic growth above market / Gaining MS% ~ 55M$ and 3 points of EBITA) above market / Gaining MS% Launch of new products

  25. Slide 25: Situation update, September 2020

    SITUATION UPDATE, SEPTEMBER 2020  Sentinel divestment  To capture maximum financial value before brand erosion (combos); no strategic value anymore  To reduce debt and gain in M&A and strategic flexibility to accelerate portfolio diversification in the USA  To prepare petfood entry in the USA (l

  26. Slide 26: Main 2020 half year achievements (1/2)

    MAIN 2020 HALF YEAR ACHIEVEMENTS (1/2) Strong hands-on management and positive Half year main focus performance at the end of June • Covid-19 management: priority given to the health and safety of people (4.5% at constant rates and 2.3% at real rates without Sentinel; (strict implementation of sanit

  27. Slide 27: Main 2020 half year commercial achievements (2/2)

    MAIN 2020 HALF YEAR COMMERCIAL ACHIEVEMENTS (2/2) Geographies  26 out of 34 geographies are growing. Among decreasing countries: UK (-10.1%), Italy (-11.4%) and India (-5.1%)  13 zones growing double-digit of which China, Brazil, Benelux, Scandinavia, Poland, Export Europe, OTC Europe… Products ra

  28. Slide 28: Focus USA (1/2)

    FOCUS USA (1/2)  Ex-Virbac performance: +3.1% @ constant rate (-2.8% excluding Sentinel) o 84.8 MU$ in 2020 vs. 82.2 MU$ in 2019  Major dynamics within our US portfolio o Higher Sentinel sales following price increase effective February 1st o Good performance of the dermatology range thanks to the

  29. Slide 29: Focus USA – Sentinel divestment (2/2)

    FOCUS USA – SENTINEL DIVESTMENT (2/2)  Sales of Sentinel 2020 first half: US $39 million (vs. US $35 million in H1-2019)  Full year pro forma impacts of Sentinel divestment at group level  Decrease in sales of around US $55 million  Decrease in EBITA’s group profitability of around -3 points  2

  30. Slide 30: Geographies: Focus China

    GEOGRAPHIES: FOCUS CHINA  China growth plans delayed o Pet food launch postponed (due to African Swine Fever and pork meat) o Suprelorin launch postponed (due to Covid-19)  Execution of our “Think very big” plan:  +21.4% in H1 2020 @ cst rates  Digital growth +42% at the end of June 2020 vs. end

  31. Slide 31: Geographies: Focus Chile

    GEOGRAPHIES: FOCUS CHILE  Good growth (+7.6% in H1-2020 at constant rates) however with a different dynamic versus previous year due to Covid-19 impact & new product launch (Veterin 80)  Growth mainly driven by aqua parasiticides and antibiotics while vaccines decreasing  Continuous R&D investmen

  32. Slide 32: Update Covid-19: current situation September 2020 (1/2)

    UPDATE COVID-19: CURRENT SITUATION SEPTEMBER 2020 (1/2)  Still many unknowns regarding the outlook for demand in the countries in which we operate (particularly in major countries such as the United States, India, and Chile), and also regarding the inventory position at all stages of the distributi

  33. Slide 33: Update Covid-19: current situation September 2020 (2/2)

    UPDATE COVID-19: CURRENT SITUATION SEPTEMBER 2020 (2/2)  Production: All the industrial sites operate at almost normal levels, with the exception of Chile (still operating at around 80%) due to Covid-19 prevention plan requiring to slow down production  With regard to inventories, production activ

  34. Slide 34: Key issues and opportunities in a post Covid-19 world

    KEY ISSUES AND OPPORTUNITIES IN A POST COVID-19 WORLD  Covid pandemic hasn’t structurally altered key dynamics in Animal Health, sector which has proved to be highly resilient to the Covid-19 crisis  It has helped accelerate some trends (e.g., home office, consolidation, digitalization, shift in d

  35. Slide 35: Estimated peak sales potential of main R&D projects

    ESTIMATED PEAK SALES POTENTIAL OF MAIN R&D PROJECTS (September, 2020) Launch Companion Animals M€ Food Producing Animals M€ Year • Parasiticides (Evicto*) • Parasiticides (Kryptazen*) Vaccines 21* 14* • 2020 • Minerals • Non pharma products • Vaccines • Dermatology • Parasiticides 2021 • Parasiticid

  36. Slide 36: 2020 perspectives – summary

    2020 PERSPECTIVES – SUMMARY 2020 Guidance Notes Including Sentinel sales of US $39 million in H1-2020 A the high end of the range Total Revenue Forex impact should be negative by –3% to 0% @ constant rates approx. €25-30 million at mid-July rates After taking into account the negative EBITA impact o

  37. Slide 37: Agenda

    AGENDA 2020 half year results Strategy execution & perspectives Appendix : 2020 agenda 37

  38. Slide 38: 2020 agenda

    2020 AGENDA April 15* Q1 sales June 22 Annual shareholders’ meeting July 20* Q2 - H1 sales September 16* Half-year financial results September 17 SFAF meeting - 1st half 2020 financial & strategic information October 14* Q3 sales January 19, 2021* Q4 - Full year sales * After market close 38

  39. Slide 39: Shaping the future of animal health

    Shaping the future of animal health =

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