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May 9, 2018
Zoetis Inc. has reported its financial results for the first quarter of 2018 and reaffirmed its guidance for full-year 2018.
The company reported revenue of $1.4 billion for the first quarter of 2018, an increase of 11% compared with the first quarter of 2017. Net income for the first quarter of 2018 was $352 million, or 72 cents per diluted share, an increase of 48% and 50%, respectively, on a reported basis. This increase includes the benefit of a lower effective tax rate in 2018 as a result of the new tax legislation enacted in the U.S. last year.
Adjusted net income for the first quarter of 2018 was up 40% to $365 million, or 75 cents per diluted share, which represented an increase of 42%, on a reported basis. Adjusted net income for the first quarter of 2018 excludes the net impact of $13 million for purchase accounting adjustments, acquisition-related costs and certain significant items.
On an operational basis, revenue for the first quarter increased 7%, excluding the impact of foreign currency. Adjusted net income increased 34% operationally, excluding the impact of foreign currency.
“We continue generating profitable revenue growth thanks to the quality and diversity of our portfolio, the innovations we bring to the market and the value we deliver to our customers,” Zoetis chief executive officer Juan Ramón Alaix said. “We remain confident in the strength of our company and our ability to offer customers more integrated solutions across the entire cycle of health care -- from prediction and prevention to detection and treatment. With this approach and our proven business model, we can generate long-term growth for Zoetis and value for our shareholders.”
Zoetis organizes and manages its commercial operations across two regional segments: the U.S. and international. Within these segments, the company delivers a diverse portfolio of products for livestock and companion animals tailored to local trends and customer needs. In the first quarter of 2018:
Revenue in the International segment was $726 million, an increase of 18% on a reported basis and 11% operationally compared with the first quarter of 2017. Sales of companion animal products grew 28% on a reported basis and 19% on an operational basis, resulting primarily from increased sales across multiple international markets of the dermatology portfolio and new products, including the oral parasiticide Simparica (sarolaner), as well as growth in vaccines in China. Sales of livestock products grew 14% on a reported basis and 7% on an operational basis, driven by strong performance in poultry and cattle. Growth in poultry products was driven by increased sales of medicated feed additives, primarily in emerging markets. Cattle products grew due to colder weather causing a need for increased treatments and strong demand for vaccines in Mexico. Strong demand in other emerging markets also contributed to growth.
Revenue in the U.S. segment was $634 million, an increase of 5% compared with the first quarter of 2017. Sales of companion animal products grew 6%, driven by increased sales in the dermatology portfolio as well as new products. This growth was partially offset by lower sales of certain in-line products due to expected competition. Sales of livestock products grew 4%, led by cattle and poultry and a return to growth in the swine business. Growth of cattle products was driven by favorable conditions in the beef market, including higher feedlot placements and variable weather conditions, which drove higher disease risk and incidence. Growth was partially offset by unfavorable market conditions in dairy, including declining producer profitability due to low milk prices. For poultry products, growth was driven by increased sales of medicated feed additive products.
Zoetis continues to drive demand and strengthen its diverse portfolio through the introduction of new products, life-cycle innovations, business development initiatives, strong customer relationships and entry into new markets and technologies. In the first quarter of 2018:
Zoetis broadened its Fostera swine vaccine franchise with approval in the U.S. of Fostera Gold PCV MH. This is the first vaccine to contain both genotypes of porcine circovirus type 2 (PCV2) – 2a and 2b – and a study showed that it provided cross-protection against the leading 2d genotype. It also provides 23 weeks of immunity for PCV and Mycoplasma hyopneumoniae -- the longest duration for commercial PCV2 combination vaccines.
The company continued to bring companion animal products to new markets. Cytopoint (lokivetmab), part of Zoetis’ canine dermatology portfolio, was approved in Mexico and Switzerland. Additionally, Simparica was approved in Thailand and Serbia. This oral parasiticide delivers fast and persistent protection from fleas and ticks in dogs, with effectiveness that lasts for 35 days without losing efficacy at the end of the month.
Zoetis also received approvals in new geographies for several major cattle products. Inforce 3, the first and only intranasal vaccine that prevents respiratory disease caused by bovine respiratory syncytial virus while also aiding in the prevention of Infectious bovine rhinotracheitis and parainfluenza virus 3, was approved in Korea and Egypt. Additionally, Spectramast DC, which helps treat mastitis in dairy cows, was approved in China.
Zoetis is a leading animal health company dedicated to supporting its customers and their businesses. Building on more than 60 years of experience in animal health, Zoetis discovers, develops, manufactures and markets veterinary vaccines and medicines, complemented by diagnostic products, genetic tests, biodevices and a range of services. Zoetis serves veterinarians, livestock producers and people who raise and care for farm and companion animals with sales of its products in more than 100 countries. In 2017, the company generated annual revenue of $5.3 billion with approximately 9,000 employees.
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