Virbac: 2020 first quarter revenue rose by +14.3% at comparable
exchange rates, significantly impacted by anticipatory buying
2020 first quarter revenue rose by
+14.3% at comparable exchange rates, significantly impacted by
anticipatory buying
Key figures |
Revenue1st quarter 2020 €247.7
M |
Total growth +13.9% |
Growth at constant exchange
rates +14.3% |
Growth at constant exchange rates and scope
1 +14.3%
including companion animals
+18.4% food
producing animals +9.8% |
1 Growth at constant exchange rates and scope is
the organic growth of sales, excluding the impact of exchange rate
changes, by calculating the indicator for the financial year in
question and that for the previous financial year on the basis of
identical exchange rates (the exchange rate used is that in effect
for the previous financial year), and excluding the impact of
changes in scope, by calculating the indicator for the financial
year in question on the basis of the scope of consolidation for the
previous financial year.
Quarterly consolidated
revenue
Virbac revenue in the first quarter was €247.7
million, with a sharp increase of +13.9% compared to the same
period in 2019. At constant exchange rates, growth was at +14.3%,
buoyed by Europe and the United States, with however a very
positive effect related, on the one hand to anticipatory buying
linked to Covid-19, and on the other hand to price increases in the
United States. As described in the second part of the press
release, we anticipate a slowdown in activity in the coming
months.
All areas show growth compared to the same
period last year. In the United States, first quarter activity
showed a marked increase of +47.4% (+42.5% at constant exchange
rates). It benefited from very large purchases by distributors of
the Sentinel and Iverhart ranges, in anticipation of price
increases applied in the first quarter of 2020. Ex-Virbac sales in
the parasiticide and dermatology ranges are growing, driven by the
launch of Easotic, whereas the other ranges were down compared to
the same period in 2019, which had seen strong growth.Outside the
United States, the Group grew +9.1% at real rates, or +10.3% at
constant rates favorably impacted by Covid-19, which generated
advance purchases. In Europe, revenue grew +13.6% at real rates
(+13.2% at constant rates). The major contributors to this
performance were France, Germany, Belgium and Poland, boosted by a
high level of activity in the companion animal ranges (including
petfood related to advance purchases in anticipation of lockdown,
and parasiticides), as well as ruminant products, which offset the
decline in sales in Italy (impacted by Covid-19). In Latin America,
excluding Chile, the Group had a good start to the year. Activity
grew by +10.9% at real rates (+15.5% at constant exchange rates),
due in particular to contributions by Brazil and Mexico. In Asia
Pacific, growth at real rates was +3.4% (+4.8% at constant exchange
rates), New Zealand drove the area’s growth with substantial
purchases of intramammary products in anticipation of Covid-19,
thereby mitigating the more moderate growth in Asia, impacted by
the drop in Vietnam, Taiwan and India. Lastly, in Chile, first
quarter activity grew +3.4% at real rates (+5.2% at constant
rates), driven by sales of antibiotics and parasiticides for
aquaculture.
In terms of species, the
companion animal activity grew globally by +19.2% at real rates
(+18.4% at constant rates), primarily buoyed by growth in internal
and external parasiticide ranges (significant anticipatory buying
related to price increases), the petfood range (pre-lockdown
purchasing prior to Covid-19), dermatology and specialties, which
offset the decline in the dental, antibiotic and vaccine ranges.
The food producing animal segment showed strong growth of +7.8%
(+9.8% at constant rates), also with advance purchases related to
Covid-19. It was driven by sales in the ruminant sector (+13.9% at
constant rates) and aquaculture (+5.1% at constant rates), which
offset the slight decline in the industrial farming sector (swine
and poultry) of -1.3% at constant rates compared to the same period
in 2019.
Covid-19 - Virbac status
report
Our thoughts go out to people around the world
who are directly or indirectly affected by this coronavirus
pandemic (Covid-19).
Our top priority is the health and safety of our
employees and we are following the evolution of this pandemic very
closely. All of our efforts are focused on finding the best ways to
protect our teams and taking every action possible to help slow the
spread of the virus and avoid overwhelming healthcare systems.
Because animal health is at the heart of public health, we are also
striving to ensure continuity as much as is possible with regard to
our commitments to veterinarians, farmers and animal owners. We
warmly thank them all, especially veterinarians and farmers, who
are on the front lines every day, continuing their essential work
to feed the planet and protect animals.
To address this situation, we quickly assembled
a dedicated committee that coordinates all positions and maintains
contact with all subsidiaries to monitor the situation as it
evolves, and to quickly and effectively make the best decisions.
Measures have been introduced at various Group sites:
communications on how the virus is spread and the barrier gestures
to be followed, monitoring of evocative symptoms, social distancing
and contact prohibition, flow control, moving work stations to
different locations (production, R&D, administrative), guided
management of outside providers, personal protective equipment such
as masks and gloves for those in the most exposed positions, etc.
These measures were designed based on recommendations by the World
Health Organization and country-specific health
authorities.
Our business continuity plans have been
triggered. Projects have been prioritized and a new work
organization has been established by dividing the teams and
spreading the time slots to avoid any overlap, as well as imposing
teleworking for all eligible positions. Our remote communication
channels have also been strengthened to better communicate with
veterinarians and farmers as well as with employees, all to ensure
continuity in our activity and our commitments to our customers in
the animal care and feeding chain.
To date we count 30 cases of Covid-19 in our
global workforce including 28 cases in France. We are continuously
monitoring their health progress and that of their relatives. The
majority of these cases are in our industrial teams at our major
production sites in France (50% of our global productions) and in
the U.S. After a temporary shutdown of our Carros site during the
last week of March, we partially re-started production (current
activity rate ~50%), with additional constraints, reduced staff and
slower work rates. Our St. Louis site (current activity rate ~70%),
as well as several of our other industrial sites are working at a
slower rate, and we are unable at this point to determine when we
can resume normal operations.
In terms of supply, we were able to mitigate
impacts in the first quarter. However, we anticipate possible
worldwide strain on the delivery of certain components or even
certain products in the second quarter. For our Chinese suppliers,
we are seeing a very gradual return of our supplies after a period
of sharp slowdown. Our Indian subsidiary (the Group’s number 3
subsidiary), which sources locally, will very likely be affected by
the country’s complex situation in terms of health and economics
and recently mandated containment measures. With respect to our
inventory, except for the companion animal vaccines for which we
have temporarily stopped production, we have safety stocks on our
main products that should cover us until the end of June 2020.
Meanwhile, we expect our business to slow during
containment periods, even if disparities may exist between
segments. In many countries, our sales representatives are confined
to their homes, with less frequent contact with veterinary clinics
for companion animals. Those clinics have reduced activity or may
even only be seeing patients by appointment and for essential and
urgent interventions. Overall, the food producing animal segment
could be less impacted.
Suspension of the 2020 outlook
Given these elements, at this point, we anticipate a decline in our
activity and profitability in the second quarter of 2020, and most
likely throughout all of 2020. As a result, due to uncertainties
related to the number of countries affected by containment
measures, the magnitude of the impact of these measures on our
activity, the length of time that the outbreak continues to grow,
and thus the duration of containment periods, we are not able to
accurately assess the extent of the decline in our activity over
the entire year. Consequently, it is also difficult to confirm at
this stage the objective of an EBITA2 ratio around 15% around 2022
at constant rates and scope. In addition to the measures we
initiated to freeze spending and investment, government support
measures for businesses, and the non-payment of dividends in 2020,
we have the assets to deal with this crisis, including a solid
financial structure, no significant repayment of debt in 2020, a
drawing capability on our lines of credit that remains significant
(~€250 million) and a positive cash position at the end March of
~€50 million. Lastly, thanks to our very diverse activity, our
worldwide footprint (33 subsidiaries and a presence in over 100
countries via distributors), our highly engaged and supportive
teams, and the stability of our shareholding, we remain very
confident in the future. 2 Ebita: Current operating profit before
depreciations of assets arising from acquisitions Virbac: NYSE
Euronext - Compartment A - ISIN code: FR0000031577/SYMBOL:
VIRPFinancial Affairs Department: tel. 04 92 08 71 32 - email:
finances@virbac.com - Website: corporate.virbac.com
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