Vétoquinol: 2022 half-year results

LURE, France–(BUSINESS WIRE)–Regulatory news:

Matthieu Frechin, CEO of Vetoquinol (Paris:VETO), said: “In an uncertain environment (Russian-Ukrainian conflict, rising inflation and slowdown in the global animal health market), our laboratory is continuing to grow, driven by the momentum of our Essential products. Our new “Ambition 2026” strategic plan continues and reinforces the changes made over the past 10 years and is based on 3 pillars: accentuate our focus (species, segments and markets), strengthen our customer orientation in all decisions and initiatives taken internally, value our cultural difference as a family business, international animal health laboratory.

At its meeting on September 13e2022, the Board of Directors of Vetoquinol SA reviewed the Group’s results and approved the 2022 half-year financial statements.

Over the first half, Vetoquinol achieved sales of €271 million, up 6.0% based on reported data and 2.0% like-for-like. The laboratory recorded a positive exchange rate effect of €11 million (+4.1%), mainly due to the appreciation of the US dollar against the euro.

As of June 30, 2022, all strategic territories grew on a reported basis, +0.9% in Europe, +12.9% in the Americas and +9.3% in Asia/Pacific, and on a like-for-like basis, +0.4% in Europe, +2.7% in the Americas and +5.4% in Asia/Pacific.

The performance of the first half of 2022 is the result of the continued growth of Essential products, the driving force of the laboratory’s strategy, which increased by 9.8% on a reported basis and by 6.8% on a like-for-like basis. They represent 56.8% of the laboratory’s sales in the first half of 2022, compared to 54.9% in the first half of 2021.

Sales of pet products (€183 million) represented 67.5% of total sales, up 9.8% based on reported data and 5.7% like-for-like. Sales to food producing animals amounted to €88 million, down 0.8% based on reported data and 5.1% like-for-like, in line with the momentum observed in each of these market segments (source: Vetoquinol).

Gross margin was 72.1%, stable compared to the first half of 2021 (72.0%) and up slightly by 0.8 points compared to 2021 (71.3%). It benefited from an improvement in the product mix and more particularly from the growth of Essential products. Stored production is up sharply by €5.7 million (H1 2022 vs H1 2021), reflecting our desire for continuity of customer service in a volatile environment and the anticipation of a phase of modernization work on the main production line. production of injectables at the Lure site.

Other purchases and external charges increased by €11.3 million in the first half, mainly due to an increase in marketing and advertising costs related to the launch of new Essentials products, including Felpreva®, and a increase in travel and entertainment expenses following two years of Covid-19 restrictions.

Personnel costs increased by 8.0%, due to the scope effect (full-year integration of the strengthening of teams in connection with the Drontal® and Profender® activities) and the increase in salaries.

EBIT before amortization of acquired intangible assets amounted to €51.5 million (19.0% of sales), down compared to the same period last year. Depreciation of acquisition assets amounted to -€7.1m compared to -€6.5m at the end of June 2021.

The Group’s EBIT is €44.4 million (16.4% of sales), compared to €50.4 million in the first half of the 2021 financial year.

In a contracted and uncertain economic environment in Brazil, a depreciation of goodwill of €9.3 million was recorded. This non-recurring and non-cash charge does not call into question the Group’s confidence in its ability to sustainably align the performance of its Brazilian subsidiary with that of the laboratory.

The apparent tax rate is 38.0% (vs. 28.3% at the end of June 2021). Restated for the impairment of goodwill in Brazil, it is 30.0%.

The laboratory’s EBITDA as of June 30, 2022 is €62.0 million (22.9% of sales).

Vetoquinol’s net income is €21.4 million compared to €36.2 million for the first 6 month of 2021.

At the end of June 2022, Vetoquinol had positive net cash of €23.7 million (after taking into account the IFRS 16 standard) compared to €53.6 million at December 31, 2021. This drop in cash results from a strong increase in the first half of 2022 in working capital due to the impacts of the main items (stocks, customers and suppliers).

Russian-Ukrainian conflict and health situation

Vetoquinol is not directly present in Ukraine and Russia, but remains exposed to the consequences of the economic tensions of this conflict and in particular to the sharp increases in the cost of certain raw materials, energy and logistics.

The laboratory also remains attentive and vigilant to the evolution of the health crisis in the countries where it sells its products and buys goods and services. It continues to make every effort to guarantee the health and safety of its employees, in accordance with its commitments to its customers and stakeholders.

Next update: Q3 2022 revenue, October 12e2022 after market

ABOUT VÉTOQUINOL

Vetoquinol is a world leader in animal health, providing medicines and non-medicinal products for the food producing animal (cattle and pigs) and companion animal (dogs and cats) markets. An independent pure player, Vetoquinol designs, develops and markets veterinary medicinal products and non-medicinal products in Europe, America and the Asia-Pacific region. Since its creation in 1933, Vetoquinol has pursued a strategy combining innovation and geographical diversification. The Group’s hybrid growth is driven by the strengthening of its product portfolio coupled with acquisitions in markets with strong growth potential. Vetoquinol employed 2,621 people as of June 30e2022.

Vetoquinol has been listed on Euronext Paris since 2006 (symbol: VETO).

The Vetoquinol share is eligible for PEA and PEA-PME.

ANNEX

SALES

€m

2022

2021

To change

(reported

data)

To change

(constant

swap

rates)

1st quarter sales

135

128

+5.5%

+2.2%

Q2 sales

136

127

+6.7%

+1.8%

First half sales

271

255

+6.0%

+2.0%

SUMMARY INCOME STATEMENT

€m

06/30/2022

06/30/2021

To change

Total sales

of which Essentials

270.8

153.9

255.3

140.2

+6.0%

+9.8%

EBIT before amortization

assets acquired

% of total sales

51.5

19.0

56.9

22.3

-5.3%

Net profit attributable to the Group

% of total sales

21.4

7.9

36.2

14.2

-14.8%

EBITDA

% of total sales

62.0

22.9

67.5

26.4

-5.5%

EBITDA CALCULATION

€m

06/30/2022

06/30/2021

Net income before equity method

21.4

36.2

income tax expense

13.1

14.4

Net financial income/expenses

0.6

(0.3)

Provisions recognized as non-recurring

operating income and expenses

9.1

0.1

Provisions and reversals

1.8

0.7

Depreciation and amortization

13.2

13.9

Depreciation and amortization – IFRS 16

2.7

2.6

EBITDA

62.0

67.5

ALTERNATIVE PERFORMANCE INDICATORS

The management of the Vetoquinol Group considers that these indicators, which are not defined by the IFRS standards, provide additional relevant information to shareholders wishing to analyze the fundamental trends, the performance and the financial situation of the Group. They are used by management for performance analysis.

Essential products: “Essential” products include veterinary drugs and non-medical products marketed by the Vetoquinol Group. These are existing or potential market leading products, designed to meet the daily needs of veterinarians in the companion animal or livestock sector. They are intended to be marketed worldwide and their scale effect improves their economic performance.

Constant exchange rates: Application of the exchange rates of the previous period to the current year, all other things remaining equal.

Like-for-like growth (LFL): Year-over-year sales growth in terms of volume and/or price at constant scope and exchange rates.

EBIT before amortization of acquired assets: This KPI isolates the non-cash impact of amortization charges on intangible assets resulting from mergers and acquisitions.

Net cash : Cash and cash equivalents less overdrafts and bank loans, including the impact of IFRS 16 compliance.

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