Virbac: increase in operating income in the first half of 2022
reflecting the dynamism of our business
CONSOLIDATED FIGURES AS AT JUNE 30thin millions of € |
|
2022 |
2021 restated 5 |
2022/2021 Change |
|
Revenue |
616.4 |
529.4 |
+16.4% |
|
Change at constant exchange rates |
|
|
+12.0% |
|
Change at constant exchange rates and scope 1 |
|
|
+12.0% |
|
Current operating income, before depreciation of assets
from acquisitions 2 |
117.4 |
104.4 |
+12.4% |
|
as a
% of revenueas a % of revenue at constant rates |
19.0%19.0% |
19.7% |
|
|
Depreciation of intangible assets from acquisitions |
1.9 |
2.2 |
|
|
Current operating income |
115.5 |
102.2 |
+13.0% |
|
Non-recurring expenses and income |
0.0 |
0.0 |
|
|
Operating income |
115.5 |
102.2 |
+13.0% |
|
Consolidated net income |
77.6 |
73.7 |
+5.2% |
|
Including net income - Group share |
77.5 |
72.0 |
|
|
Shareholders’ equity - Group Share |
819.7 |
697.0 |
+17.6% |
|
Net financial excess 3 |
19.6 |
54.5 |
-64.0% |
|
Operating cash flow before interest and taxes
4 |
138.3 |
122.7 |
12.8% |
|
1 Change at constant exchange rates and scope
corresponds to the organic growth of sales, excluding exchange rate
variations, by calculating the indicator for the financial year in
question and the indicator for the previous financial year on the
basis of identical exchange rates (the exchange rate used is the
one from the previous financial year), and excluding change 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.
2 Current operating income, before depreciation
of assets arising from acquisitions, reflects current income
adjusted for the impact of allowances for depreciation of
intangible assets resulting from acquisition transactions.3 Net
financial excess corresponds to current (€53.6 million) and
non-current (€64.4 million) financial liabilities as well as a
lease obligation related to the application of IFRS 16 (€38.2
million), less the cash position and cash equivalents (€175.8
million) as published in the statement of financial position.4
Operating cash flow corresponds to operating income (€115.5
million) restated for items having no impact on the cash position
and impacts related to transfers. The following items are restated:
asset depreciation and impairments (€21.7 million), provisions for
contingencies and charges (-€0.3 million), provisions related to
employee benefits (€0.9 million), and the other expenses and income
without any impact on cash position (€0.4 million), and the impacts
related to transfers (€0.1 million).5 As a reminder, in March 2021,
IFRS IC issued a final decision on accounting for the costs of
configuring and customizing software used under a SaaS contract. As
at June 30, 2021, the impacts were being analyzed, and the decision
had not yet been applied when preparing the half-yearly accounts.
The comparative information was therefore restated in the
consolidated financial statements as at June 30, 2022.
The accounts were audited by the statutory
auditors and reviewed by the board of directors on September 13,
2022. The report of the statutory auditors is in the process of
being issued. The statements and detailed presentation of the
half-year results are available on the corporate site at
corporate.virbac.com.
Thanks to the
Virbac teams’ constant dedication to
animal health, we posted revenue in the first half of the year of
€616.4 million, an increase of +16.4% compared to 2021.
Excluding the favorable impact of exchange rates, revenue shows
growth of +12.0%. This growth benefited in part from a favorable
baseline effect representing one point of growth in revenue,
attributable to new products acquired starting in the second
quarter of 2021.
All areas are growing organically at the end of
June. It should be noted, however, that double-digit growth in
Europe stalled in the last quarter, due to the slowdown in the
market as anticipated in our annual outlook. Thus, the revenue in
this area increased by +6.8% at real rates (+6.2% at constant
rates), thanks mainly to the contribution of the United Kingdom,
France and Italy. The area is supported by the strong dynamism of
the pet ranges (in particular petfood, specialties, and vaccines),
which compensated for the decline in the ranges for production
animals. In Asia-Pacific, growth at real rates was +19.8% (+15% at
constant exchange rates). Australia and India are driving growth in
the region, generating more than 85% of this growth, in particular
on products for cattle, which largely compensates for the decline
in China, which was heavily impacted by lockdowns at the beginning
of the year and which, despite a rebound since May, remains down at
the end of June. In Latin America, business grew by +25.1% at real
rates (+14.6% at constant exchange rates), thanks in particular to
contributions from Brazil and Mexico. Lastly, in the United States,
business grew by +32.2% (+19.9% at constant exchange rates). It
benefited from strong sales of new products launched in 2021
(Clomicalm and Itrafungol) and those launched in early 2022
(petfood, and Tulissin for the production animals segment), as well
as good performance on the dental and dermatology range.
The current operating income before
depreciation of assets from acquisitions
amounts to €117.4 million, a significant growth compared to the
first half of 2021 (€104.4 million). This improvement is mainly due
to the strong growth in our revenue, driven by strong performance
in all areas, despite the slowdown in market dynamics seen since
the beginning of the year. This was partially offset by a
deterioration in the margin in relative terms, due to the impacts
of inflation on raw material costs and operational expenses such as
transport and energy. We are also seeing a rebound in business
expenses (travel expenses, seminars, etc.), post-Covid-19, as well
as an increase in our R&D expenses as a result of our desire to
increase our spending in this area. It should also be noted that
the half-yearly result at the end of June 2022 benefits from the
recognition of income of €3 million, the last compensation tranche
for the continuation of R&D projects acquired from Elanco in
2021. As a reminder, the current operating income before
depreciation of assets from acquisitions from the first half of
2021 benefited from the recognition of non-recurring items in the
amount of €6.6 million (€4 million in compensation for the
continuation of R&D projects from Elanco, €1 million in
additional margin on the Clomicalm and Itrafungol products which
benefited from a zero cost of sales in connection with the
acquisition, and €1.6 million from a reversal of a provision for
disputes). After restating the positive impact of these items over
the two periods, the ratio of “current operating income before
depreciation of assets from acquisitions” to “revenue” at the end
of June 2022 is 18.6%, slightly up compared to the same period of
2021 (18.5%).
Consolidated net income was
€77.6 million, up 5.2% compared to the first half of 2021. This
improvement in our net income is explained by the reasons given
above, in particular the growth of our business and the good
control of our operating expenses, which remain contained as a
proportion of our revenue, despite the inflationary pressure
observed in the first half of 2022. It should be noted that our
financial result corresponds to a charge of €8.1 million, which is
significantly up from the first half of 2021 (charge of €1.6
million). This is explained by the drop in foreign exchange income
(unrealized loss), due to the depreciation of the Chilean peso
against the euro and the US dollar in the first half of 2022
compared to the same period in 2021. This is only partially offset
by the decrease in the cost of net debt of €2.5 million, resulting
from the reduction in interest on rate hedges that matured in the
second half of 2021 and in January 2022.
Net income - Group
share amounted to €77.5 million, i.e. an increase of 7.7%
compared to the first half of the previous year (€72 million),
driven by operational performance, the elements shared above, and
the decrease in the share of non-controlling interests as of June
30, 2022, following the acquisition of 100% of Centrovet in the
second half of 2021.
On the financial side, our net
financial excess amounts to €19.6 million at the end of June 2022,
compared to €73.8 million at the end of December 2021. This
deterioration over the first six months of the year is mainly due
to the cyclical nature of our cash generation model, with cash
generation occurring more in the second half of the year. This
situation was exacerbated over the period by higher working capital
requirements in the first half of 2022, due to the strong growth in
our revenue, a reduction in the amount of factored receivables,
higher capital expenditure, and finally the increase in dividends
paid in respect of the results for 2021.It should be noted that on
September 12, 2022, Virbac unanimously obtained from its banks a
one-year extension of the maturity of its €200 million syndicated
financing contract, which is now fixed at October 2027.
OutlookRevenue growth at constant
exchange rates and scope is still expected to be in the range of 5%
to 10% and will be refined when the third quarter revenues are
published. The ratio of “current operating income before
depreciation of assets from acquisitions” to “revenue” should
consolidate at 15% at constant exchange rates, despite impacts from
inflation. Finally, our debt relief should be around €30 million
excluding dividends, at constant scope and exchange rates. The
increase in our working capital requirements due to the growth in
our activity, inflation, and management decisions (safety stock,
for example) has led us to adjust our debt reduction forecasts for
2022 downwards.
ANALYSTS’ PRESENTATION -
VIRBAC
We will hold a virtual
analyst meeting on Friday, September 16, 2022 at 2:30 p.m. (Paris
time - CEST).
Information for
participants:
Webcast access link:
https://bit.ly/3IUnx0t
This access link is
available on the corporate.virbac.com site, under the heading
“financial press releases.” This link allows participants to access
the live and/or archived version of the webcast.
You can ask questions
via chat (text) directly during the webcast or after watching the
replay at the following email address: finances@virbac.com.
A lifelong commitment to animal
healthAt Virbac, we provide innovative solutions to
veterinarians, farmers and animal owners in more than 100 countries
around the world. Covering more than 50 species, our range of
products and services enables us to diagnose, prevent and treat the
majority of pathologies. Every day, we are committed to improving
the quality of life of animals and to shaping the future of animal
health together.
Virbac: Euronext Paris - Compartment A –ISIN
code: FR0000031577 / MNEMO: VIRPFinancial Affairs Department: tel.
04 92 08 71 32 - email: finances@virbac.com - Website:
corporate.virbac.com
- Virbac_2022 _half year results
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