Virbac : slight increase of the current operating profit in the first half of 2013

Virbac : slight increase of the current operating profit in the first half of

Public release - August 30, 2013

Consolidated numbers as of June 30          2013  2012   % change
in million Euros                                        2013 / 2012
Revenue fromordinaryactivities              372.0 349.4    +6.4%
          Growth at constant exchange rates                +8.6%
Growth at constant scope and exchange rates                -0.5%
Current operating profit                    56.2  55.8     +0.8%
                            As a % of sales 15.1% 16.0%
Other non-operating income and expenses     -1.8   1.1
Operating profit                            54.4  56.9     -4.4%
Financial expense                            2.9   1.4
Profit before tax                           51.5  55.5     -7.2%
Net profit - Group share                    32.6  37.9    -14.0%
Shareholders' equity                        350.8 337.7    +3.9%
Net financial debt                          210.9 84.8     +149%

 The  financial statements  have been  subject to  a limited  review by  the 
 They are available on

The sales evolution  during the first  half reached +6.4%  and is coming  from 
acquisitions made during 2012 (New  Zealand and Chile). Organic growth  during 
these first six months has been nearly nil globally (-0.5%) due to low  market 
dynamics and factors of slow down specific  to the Group in Europe and in  the 
United States. Besides, the rather strong weakening of foreign exchange  rates 
weighted negatively (-2.2%) on the overall performance.

The current operating profit  is slightly increasing. It  amounted to 56.2  M€ 
compared to 55.8  M€ last year,  a decrease of  0.9 point as  a percentage  of 
sales.  Such  evolution  is  resulting  from  different  factors  which   have 
compensated in value:

    *on one side, excluding acquisitions, the overall stability of sales  and 
      the worsening  of exchange  rates resulted  in a  decrease in  operating 
      profitability,  despite  a  strict  control  of  current  expenses,   in 
      comparison to the record level reached  last year. Results in the  first 
      half of 2012 had actually been driven up by a high performance in Europe
      and in the  United States, markets  generating the highest  contribution 
      for Virbac, and by favourable exchange rates. Besides, costs incurred in
      the US related  to the  temporary withdrawal  of Iverhart  Plus and  the 
      offer of a substitution with Iverhart Max weighted unfavourably on  this 
      first half result;

    *at the same time, the increase  of resources dedicated to innovation  is 
      being confirmed. Research and development expenses have grown by  around 
      11.5% at constant  perimeter, a0.9  point increase as  a percentage  of 

    *conversely, acquisitions  made  in  2012 and  mainly  Centrovet  (Chile) 
      because of its size had, as expected, a positive impact on the operating
      profitability and a  high contribution to  the result, compensating  for 
      the factors of decrease described here above.

The net profit - Group share is decreasing. Firstly it includes a  non-current 
expense of  1.8  M€  due  to  the  revaluation  of  Centrovet  inventories  in 
accordance with IFRS rules related to business combinations. Last year on  the 
contrary, a one-time profit of 1.1 M€ had been booked following the sale of  a 
non-strategic business. Secondly, financial expenses  increase this year as  a 
consequence of a higher  level of debt due  to the 2012 acquisitions.  Lastly, 
the profit attributable to the  non-controlling interests, which reflects  the 
share of minority interests in Centrovet, amounted to 3.7 M€.

From a financial standpoint, the increase  of debt in comparison to June  2012 
is due to the acquisitions made last year. During the first six months of this
year, debt increased by 77 M€: this is due on the one hand to the payment of a
price adjustment clause on the Centrovet acquisition; on the other hand to the
seasonal working capital needs; lastly, to major capital expenditure  projects 
including new industrial units  in France and in  Mexico and the extension  of 
Centrovet facilities in Chile. Virbac's financial structure is very sound with
a level of net debt  which remains moderate compared  to equity and cash  flow 

2013 perspectives
After the low  start of the  year, Virbac  remains confident in  a rebound  of 
organic growth in the second half. With the addition of external growth -  net 
of divestments occurred in 2012 -,  total 2013 revenues should reach a  double 
digit growth at  constant exchange  rates and lead  to an  evolution at  least 
similar of the current operating profit.  Should the current trend of  foreign 
exchange rates be lasting it will however moderate this evolution. Taking into
account the increase of financial expense and the non-controlling interests in
Centrovet, the net  profit-Group share  should be a  bit lower  than in  2012, 
excluding exceptional items (1).

(1)  besides  the  non-recurring  expense  recorded  in  the  first  half,  an 
exceptional profit  or  loss  may  also be  recognized  in  the  2013  result, 
following IFRS, if the actual amount to be paid early 2014 with respect to the
last price adjustment for the Centrovet  acquisition, which is linked to  2013 
performance criteria, would differ from the estimate made and booked as of the
date of the transaction in 2012.  

Virbac : slight increase of the current operating profit


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