Throughout the first half-year, Group revenue reached €463.7 million versus €430.0 million over the same period in 2018, for an overall change of +7.9%. Adjusted for the favorable impact of exchange rates, revenue shows growth of +6.6%. 
All areas show growth for the half-year compared to the same period in 2018, with solid double-digit growth in half of the Group’s subsidiaries. In the United States, activity shows strong first half-year growth. It benefits from a significant base effect related to 2018 first half-year distribution inventory reductions, which impacted ex-Virbac sales. Outside the United States, the Group continues to see strong growth. In Europe, growth is mainly driven by Spain, Germany, Benelux, Poland, Scandinavia and Portugal and by the companion animal ranges. In Latin America, excluding Chile, the Group had a good start to the year, thanks to contributions by Brazil, Mexico and Colombia. In Asia Pacific, growth was very strong in China, Japan and Taiwan, which offset the more modest growth in India and Australia, as well as New Zealand’s delay. Lastly, in Chile, first half-year activity remains strong, driven primarily by sales of injectable vaccines and parasiticides for aquaculture.

The current operating profit before depreciation of assets arising from acquisitions amounts to €66.9 million, growing significantly compared to 2018 (€45.2 million). It benefits from strong performance in all countries, particularly in the United States, as well as in Chile and Australia. Furthermore, sound cost control and a better absorption of fixed costs have also contributed to improving the operating margin for the period. Lastly, first half results are favorably impacted by the recognition of exceptional items such as the profit from the sale of the American subsidiary’s office space, amounting to €1.1 million, and the positive impact of the application of an amendment to executive board members’ defined benefit retirement plan, amounting to €3.2 million. Excluding these exceptional items, the ratio of profitability to revenue grew by +3 points compared to the end of June 2018, due to the result of excellent activity in the first half-year, the operational execution of the competitiveness strategy, and to a lesser extent, the favorable base effect in the United States. 

Net profit from ordinary activities (net consolidated profit adjusted for non-recurring expenses and income and for non-current taxes) reached €35.5 million, up 111.6% over 2018. Net profit from ordinary activities is positively affected by growth in activity, sound cost control, recognition of a few exceptional items, as well as a favorable exchange rate, mainly for the Chilean peso, which appreciated compared to the euro and the dollar when compared with the same period in 2018, a period in which the exchange rate impact was very negative. 

Net profit - Group share reached €26.4 million, a large increase compared to the prior year (€12.3 million). Net profit for the period is impacted by an additional impairment of assets associated with the leishmaniosis vaccine, for a net amount of €7.2 million. However, profit benefits from the positive impact related to an impairment of deferred tax relative to fiscal losses by the American subsidiary, which saw a sharp decrease in the first half of 2019 (€0.1 million) compared to the 2018 impairment amount for the same period (€3.4 million).

From a financial standpoint, the Group’s net debt is at €455.5 million, down by €31.6 million compared to June 30, 2018 and €61 million at constant rates and scope (excluding the impact of IFRS16). The lack of a dividend payment by Virbac SA on 2018 profits, and a strict control of working capital requirements and investments contributed to the Group’s debt relief. Thus, the Group is in compliance with the financial ratio (Net debt/EBITDA), which comes out at 3.00 versus 4.25, which was the maximum limit set at the end of June, 2019 as part of the financial covenant.

Outlook 
First half-year activity supports the outlook announced by the Group for 2019. Annual revenue growth at constant rates is now expected to be at the high end of the 4% to 6% range compared to 2018 and the ratio of “current operating profit, before depreciation of assets arising from acquisitions” to “revenue” should currently be growing by around 2 points compared to 2018 at constant exchange rates. From a financial standpoint, tight control of invested capital should allow further debt relief of between €40 and €50 million at constant rates for the year. 

Furthermore, in 2019, the financial ratio (net debt/EBITDA) shall once again respect the obligations of the original contract with the banks, and had to be therefore below 4.25 by the end of June, 2019 and will have to be below 3.75 by the end of December, 2019. The Group’s financing is ensured primarily through an RCF (Revolving credit facility) line of €420 million, maturing in April 2022, as well as through bilateral bank loans, financing by the EIB (European investment bank) and Schuldschein disintermediated contracts, whose terms are between four and ten years.

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