The Group registered annual revenue of €861.9 million, a slight decline of -1.1% and -0.5% at actual exchange rates and constant rates respectively, compared to last year. From a regional perspective, growth has been strong outside of the United States, at 3.4% and 3.6% at comparable rates. In Europe, there has been slight growth at constant exchange rates, boosted by the performance of the United Kingdom, Italy, Poland and Belgium, despite an overall downturn in the vaccine and external parasiticide ranges. In the rest of the world, organic growth continues to be strong in many emerging countries, in particular Brazil, Mexico, Chile, China, as well as India, which returned to two-digit growth in the second half of the year after the effects of the coming into force of the new VAT in mid 2017, as well as demonetization at the end of 2016. The Pacific region showed a slight decline over the year, primarily as a result of a decision to discontinue products in New Zealand. Finally, business recovery has been slower than expected in the United States, posting a drop in business of -20.2% at constant exchange rates.

Current operating profit before depreciation of assets arising from acquisitions amounted to €64.4 million, slightly down from 2016 (€66.4 million), despite increased investment in R&D compared to 2016 (+€5.6 million at constant rates). Exchange rates had a very slight negative impact on operating profit adjusted in the amount of +€0.3 million. Operating profit from ordinary activities benefited from strong performance in a number of countries, including Brazil, Mexico, Chile, China, and India, as well as from sound cost control. This performance was offset by weaker activity recorded in the United States, which adversely affected the cost of sales, as well as the increased investment in R&D.

Net profit from ordinary activities (net consolidated profit adjusted for non-recurring expenses and income and for non-current tax) totaled €29.5 million, down 16.3% from 2016. Net profit from ordinary activities was impacted by decreased activity, higher financing costs associated with a less favorable exchange rate impact on the Chilean Peso compared to 2016, as well as by an increase in the current tax expense.

Net profit - Group share was -€2.6 million, a significant drop compared to the previous year, in particular as a result of the impairment of the deferred tax asset on tax losses carried forward by the US subsidiary from the 2015 to 2017 financial years (€21.4 million). This impairment is explained, in application of IAS12, in particular by the existence of a history of recent and unused tax losses. The decrease in net result is also explained to a lesser extent by the €5 million impairment of the assets associated with the leishmaniosis vaccine, following the arrival of a new player on the market.

From a financial standpoint, the Group’s net debt is at €460 million, down by €87 million compared to December 31, 2016. The lack of a dividend payment by Virbac SA on 2016 profits, a strict monitoring of working capital requirements, as well as further development of operating funding solutions (factoring in certain subsidiaries) contributed to the Group's debt relief. Furthermore, the positive euro-dollar exchange rate effect, which amounted to approximately €40 million, contributed to debt reduction. Thus, the Group is in compliance with the financial ratio (Net debt/Ebitda), which amounts to 4.28 versus 4.75, the maximum limit set at the end of December, 2017 as part of the financial covenant.

Outlook

Given the slower than expected business recovery in the United States, and thanks to a performance that the Group is forecasting to be rather good in the other regions, a low-single-digit increase in revenue at constant rates is expected in 2018 compared to 2017.

For the entire year, the Group anticipates the ratio of "current operating profit before depreciation of assets arising from acquisitions" to "revenue", at constant exchange rates, will increase by around 0.5 point compared to 2017.

From a financial standpoint, tight control of invested capital should allow further debt relief, which is expected to hover around €30 million for the year. Furthermore, as part of its funding policy, the Group strengthened its liquidity through establishment of a medium-to-long-term line of credit of up to $90 million. This new line thus completes the RCF line (Revolving credit facility) of €420 million, signed in 2015 with historical banking pool, bilateral lines and outstanding Schuldschein loans. Similarly, in order to afford itself greater flexibility, the Group obtained a relaxation of its financial covenant (net debt/Ebitda) with its bankers for 2018. It was set at 5.0 at the end of June 2018 versus 5.5 at the end of June 2017, and at 4.25 at the end of December 2018 versus 4.75 at the end of December 2017. As of 2019, it will return to the initial commitment levels of 4.25 at the end of June and 3.75 at the end of December.

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