Quarterly consolidated revenue
Group revenue reached €233.6 million in the third quarter, an increase of +14.3% at real rates and +12.2%, adjusted for favorable exchange rates. All areas showed solid performances, particularly Europe, the United States and Asia Pacific, which drove the quarter’s growth. In the United States, activity grew by +45.4% at real rates (+38.3% at constant rates) thanks to the dental, Iverhart and antibiotic ranges, with a favorable base effect for the quarter. Sales of the Sentinel range remained stable compared to the same period in 2018. Outside the United States, growth reached +10.8% at real rates (+9.3% at constant rates), reflecting Europe’s momentum buoyed by excellent performances, particularly in the United Kingdom and Germany and by the area’s export activity. In the same way, Asia Pacific and Latin America continued contributing positively to growth driven respectively by India, Australia, Japan and China, as well as Brazil. In terms of ranges, growth originated primarily from companion animal products, such as the dental range, parasiticides, petfood and specialty products. Furthermore, products for bovines, such as vaccines and food supplements, and aquaculture parasiticide products, played a role in the quarter’s performance.

Cumulative revenue at the end of September
Revenue reached €697.3 million versus €634.3 million over the same period in 2018, recording a total growth of +9.9%. Adjusted for the favorable impact of exchange rates, particularly the American dollar, the Mexican peso and the yen, revenue showed growth of +8.4%.

All areas continued to show sustained growth at the end of September compared to the same period in 2018, thus, the Group has seen eight consecutive quarters of growth at constant rates. In the United States, activity continued to grow by +32.2% at real rates (+25.2% at constant exchange rates) over the period. However, this growth was bolstered by a significant base effect noted at the end of June, related to inventory reductions in distribution during the first half of 2018, which had impacted ex-Virbac sales. Ex-distributor sales in the United States of Virbac products to veterinary clinics are stable overall compared to the same period in 2018. Heartworm products were down compared to 2018, with strong, double-digit growth in the Iverhart range that partially offset the erosion of Sentinel sales. Other ranges, like sales in additional distribution channels, continued their double-digit growth, driven by the momentum of dental, specialty and antibiotic products.

Outside of the United States, the Group showed significant growth of +6.8% at real rates, or +6.0% at constant rates. In Europe, revenue surged thanks to an excellent third quarter (+4.8% at real rates and +4.7% at constant rates). The main contributors to this performance were Northern European countries (including the United Kingdom and Germany), Spain, which offset the drop in Italy; and France, which is down very slightly in a market itself in decline. In Asia Pacific, growth at real rates was +7.5% (+6.1% at constant exchange rates). Growth was very strong in China and Japan, India benefited from improved growth at the end of September, and New Zealand’s delay was offset by Australia. In Latin America, excluding Chile, the Group confirms the good trend of the start of the year. Activity continued to grow by +11.5% at real rates (+9.9% at constant exchange rates), thanks to strong contributions by Brazil and Mexico. Lastly, in Chile, activity showed strong growth of +10.4% at real rates (+7.2% at constant rates), driven primarily by sales of injectable vaccines and parasiticides for aquaculture.

In terms of species, revenue in the companion animal segment grew overall by +14.8% at real rates (+12.8% at constant rates), buoyed by strong performances in all ranges (parasiticides, petfood, dental and specialties). The food producing animal segment showed more moderate growth of +3.4% at real rates (+2.5% at constant rates). Aquaculture grew by +10.3% at constant rates, thanks primarily to momentum in sales of injectable vaccines and parasiticides for salmon. The bovine sector grew by +2.0% at constant rates, thanks to sales of vaccines and nutritionals, offsetting the decline in antibiotics, and lastly, the industrial sector (swine and poultry) showed a slight downturn of -0.7% at constant rates, impacted by new regulations on the prescribing of antibiotics in Italy.

Outlook

Following the very good performance of the third quarter, the Group raises its annual revenue growth outlook at constant rates between 5% and 7% compared to 2018. The ratio of “current operating profit, before depreciation of assets arising from acquisitions” to “revenue” should now grow by around 2.5 points compared to 2018 at constant exchange rates. From a financial standpoint, tight control of invested capital should allow further debt relief of about €60 million at constant rates for the year.

Furthermore, in 2019, the financial ratio (net debt/EBITDA) is once again based on the original banking contract, and must therefore 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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