Zoetis Inc., Parsippany, N.J., has reported its financial results for the fourth quarter and full year of 2019 and provided full0year guidance for 2020.
The company reported revenue of $1.7 billion for the fourth quarter of 2019, which was an increase of 7% from the fourth quarter of 2018. Net income for the fourth quarter of 2019 was $384 million, or 80 cents per diluted share, compared with $345 million, or 71 cents per diluted share, in the fourth quarter of 2018.
Adjusted net income for the fourth quarter of 2019 was $440 million, or 92 cents per diluted share, an increase of 15% and 16%, respectively. Adjusted net income for the fourth quarter of 2019 excludes the net impact of $56 million for purchase accounting adjustments, acquisition-related costs and certain significant items.
On an operational basis, revenue for the fourth quarter of 2019, excluding the impact of foreign exchange, increased 9% compared with the fourth quarter of 2018. Adjusted net income for the fourth quarter of 2019 increased 13% operationally, excluding the impact of foreign exchange, the company said.
For full-year 2019, the company reported revenue of $6.3 billion, an increase of 7% compared with 2018. Net income for 2019 was $1.5 billion, or $3.11 per diluted share, an increase of 5% and 6%, respectively.
Adjusted net income for 2019 was $1.8 billion, or $3.64 per diluted share, an increase of 15% and 16%, respectively. Adjusted net income for full year 2019 excludes the net impact of $255 million for purchase accounting adjustments, acquisition-related costs and certain significant items.
On an operational basis, revenue for full year 2019 increased 10%, excluding the impact of foreign exchange. Adjusted net income for full year 2019 increased 14% operationally, excluding the impact of foreign exchange, the company said.
“In 2019, Zoetis delivered another year of strong growth and market leadership thanks to our diverse and durable portfolio and commitment to continuous innovation,” Zoetis chief executive officer Kristin Peck said. “We grew revenue 10% operationally, which is once again above market growth in a competitive, global sector. We also grew our adjusted net income faster than revenue, at 14% operationally, continuing to achieve our goal of growing profitability faster than revenue over the long term.”
“Looking ahead in 2020, we are excited about the launch of Simparica Trio, our new triple combination parasiticide for dogs, and we will be heavily focused on bringing this key innovation to customers around the world,” Peck said. “Additionally, we will continue to advance our pipeline with innovations in parasiticides, monoclonal antibodies and vaccines; support our latest product launches and life-cycle innovations across the portfolio, and invest in newer growth areas for us such as diagnostics, digital and data analytics. For full-year 2020, we expect operational growth of 7% to 9.5% in revenue and 8% to 11% in adjusted net income. As the new CEO of Zoetis, I look forward to carrying on the company’s successful formula of customer focus, innovation and execution as we continue to deliver on our long-term value proposition to shareholders."
In the fourth quarter of 2019, revenue for Zoetis in the U.S. segment was $861 million, an increase of 6% compared with the fourth quarter of 2018. Sales of companion animal products increased 15%, driven primarily by growth in key dermatology portfolio across both the Apoquel and Cytopoint brands. Additionally, companion animal sales benefited from the recent acquisition of Platinum Performance and its nutritional product formulas. Increased sales of parasiticides, including ProHeart 12 and Simparica, also significantly contributed to growth in the quarter.
Sales of livestock products in the U.S. declined 3% for the company in the quarter. This decline was the result of continued weakness in both the beef and dairy cattle sectors, which more than offset double digit growth in poultry and swine. Growth in poultry was driven primarily by increased sales of Zoamix, an alternative to antibiotics in medicated feed additives, while growth in swine was the result of increased sales of medicated feed additives and vaccines.
Revenue in the International segment during the fourth quarter was $791 million, an increase of 9% on a reported basis and an increase of 12% operationally compared with the fourth quarter of 2018, the company said. Sales of companion animal products grew 23% on a reported basis and 26% on an operational basis. Growth resulted primarily from increased sales across key dermatology portfolio and in certain parasiticides, including Simparica and the Revolution/Stronghold franchise, as well as growth across key markets in Western Europe and in China. New diagnostics accounts in the U.K. and emerging markets also contributed to growth.
Sales of livestock products internationally grew 2% on a reported basis and 5% operationally, Zoetis said. Growth in the company’s cattle portfolio was driven by favorable conditions in key markets, including Australia, Germany and Mexico, as well as other smaller developed markets. Alpha Flux, a recently launched parasiticide that controls sea lice in salmon, was the primary driver of growth in fish, while promotional activities across Russia, India and Brazil drove growth in poultry. Sales of swine products declined as a result of the ongoing impact of African swine fever in China and other smaller markets in Southeast Asia, said the company.
Since its last quarterly earnings announcement, Zoetis has continued to expand its reference laboratory capabilities in the U.S. with the acquisitions of Phoenix Lab and ZNLabs in November 2019 and Ethos Diagnostic Science in 2020. The company said this builds on its strategy to develop a more comprehensive diagnostics offering with enhanced value for veterinarians.
Zoetis also received approval for Rimadyl (carprofen) for dogs in China, one of the fastest-growing companion animal markets in the world. This product, approved in both chewable and injectable formulations, is indicated for the relief of pain and inflammation associated with osteoarthritis (chewables) and for the control of postoperative pain associated with soft tissue and orthopedic surgeries (injectable). It was first approved in the U.K. in 1993.