First-half revenue saw overall growth of +1.8%, marked by the favorable evolution in exchange rates; at comparable rates and scope, sales are down slightly at -0.5%. The Group’s sales numbers are mixed in the first half. They show growth in certain emerging countries (China, Brazil, Mexico) due in particular to the dynamism of product lines for food producing animals. But this does not, however, make up for the drop in the United States, where sales to distributors were impacted by a commercial recovery that was slower than planned, and price pressure particularly on the Sentinel line. It should be noted that first-half revenue includes the proceeds from a licensing agreement of €2.8 million.

The current operating profit before depreciation of assets arising from acquisitions amounts to €40.7 million, up from the first half of 2016 (€39.7 million). Exchange rates had a positive impact on adjusted operating profit up to +1.4 million €. Operating profit benefits from strong performance in many countries, particularly in Latin America, as well as from cost control and to a lesser extent from a slight decrease in expenditures on R&D. This is partly offset by weaker sales recorded in the United States, which negatively impacted the cost of goods sold. 
 
The net profit - Group Share amounts to €13.9 million, an increase of +6.3% compared to the first half of 2016. This is despite the increase in financial costs which, in June 2016, had enjoyed a positive foreign currency exchange impact on Centrovet’s debt, related to the change in the Chilean peso. This currency’s stability during this half did not allow for the same positive effect. To a lesser extent financial costs were also impacted by the increase in financial expenses.

From a financial standpoint, the Group’s net debt is at €542.9 million, down by €4.2 million compared to December 31, 2016. Traditionally, the Group records an increase in funding needs in the first half, related to the seasonal increase in working capital requirements. The lack of a dividend payment by Virbac SA on 2016 profits, a strict audit of working capital requirements, and the further development of operating funding solutions (factoring in certain subsidiaries) helped to limit this increase. Furthermore, the debt benefited from a positive euro/dollar exchange impact. At constant parity, the debt would have been approximately €30 million greater. Thus, the Group is in compliance with the financial ratio (Net debt/EBITDA), at 4.64 versus 5.5, the maximum limit set at the end of June, 2017 as part of the financial covenant.

Outlook 

Given the slower than expected recovery in the United States, and despite overall performance at the level expected in the other regions, the Group's revenue at constant exchange rates is expected to be around 2016 in 2017.

For the full year, the Group anticipates a ratio of “current operating profit before depreciation of assets arising from acquisitions” to “net sales”, at constant exchange rates, at the level of 2016. The progression of this ratio may be higher at current exchange rates.

From a financial standpoint, tight control of invested capital and the impact of the appreciation of the euro against the dollar should allow further debt reduction, which should be between €30 million and €50 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 USD90 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. As with the situation at the end of June 2017, the Group should be able to fulfill its financial covenant set at 4.75 (Net debt/EBITDA) by December 31, 2017.

A SFAF meeting for analysts will be held on Tuesday, September 12, 2017 at 2:30 pm CET -Paris time in the New York Room #Cloud Business Center, 10 bis, rue du 4 Septembre, 75002 in Paris (France). 
Participants may arrive 15 minutes before the start of the meeting. You may also attend the meeting using the webcast available via the link below. 
INFORMATION FOR PARTICIPANTS
Webcast access link:http://event.onlineseminarsolutions.com/r.htm?e=1481373&s=1&k=B9DC1B8940152A565144056C5BF7CE82
This link allows participants to access the live and/or archived version of the Webcast.
There will be no real-time interaction. You may send us your questions, if necessary, via our email address: finances@virbac.com.