Virbac: quarterly sales affected by distributor destocking in the United States

ID: 1524218
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(Thomson Reuters ONE) -



Virbac: quarterly sales
affected by distributor destocking in the United States

Public release - 12 October 2017


Consolidated quarterly sales
Virbac sales for the third quarter reached ?192.7 million, a decrease of -10.9%
(-9.4% at constant exchange rates) from the same period in 2016. This drop is
essentially due to the situation in the United States, where ex-Virbac sales for
the period dropped significantly due to major distributor destocking, notably of
the Sentinel range (Distributors reduced the stocks by approximately ?20
million). However, ex-distributor sales continued to grow in the US, achieving a
+4% increase. Sales outside the United States increased +2.5% at constant
exchange rates, led by dynamic markets in India, Chile and Brazil; despite the
decline in the Pacific region which was affected by the discontinuation of
parasiticide products in Australia and an unfavorable comparison basis on
intramammary ranges in New Zealand.

Total sales at the end of September
?630.2 million compared to ?646.2 million last year, a -2.5% decrease or -3.5%
decrease at constant scope.

In terms of geographies, the United States posted a -31% net decline at the end
of September, including -32% at constant exchange rates. Sales in this period
were heavily affected by distributor destocking, particularly of the Sentinel
range, which posted a net decrease in ex-Virbac sales, while ex-distributor
sales declined only slightly (-2%) over the same period. Ex-Virbac sales of the
Iverhart range show a major decline, although they continue to show strong
growth in terms of ex-distributor sales (+63%). Nevertheless this growth is well
below forecasts. Ex-Virbac sales for the other ranges are declining, but sales
continue to increase at clinics (+12%). The Group anticipates that distributors


will restock before the end of the year, which would put them at stock levels
similar to those at the end of 2016.

Outside the United States, the Group achieved +2% organic growth (+3% at real
exchange rates). Generally, Europe is stable at constant exchange rates, notably
due to a decline in vaccines and the OTC business.
In the rest of the world, organic growth is sustained in numerous emerging
countries, particularly Brazil, Mexico and India (which returned to two-figure
growth in the third quarter following the impact of the implementation of new
tax regulations). In line with third-quarter trends, the Pacific region posted a
decline at the end of September.
Otherwise, sales in Chile increased very slightly from 2016 with varied results
(growth in the vaccine range and a decline in antibiotics).

In terms of species, sales in the companion animals segment declined overall by
-9.5% at constant scope and exchange rates, reflecting the impact of US
destocking. Outside the United States, business in this segment was stable at
-0.7%, of which -0.4% was organic growth. The most heavily impacted ranges in
comparison to the same period in 2016 were internal and external parasiticides
and dog vaccines, which suffered due to the temporary reduction in production
capacity. Conversely, growth was sustained in the specialties, dermatology and
hygiene ranges.

The food producing animals segment increased overall +6.6%, of which +4.2% was
achieved at constant exchange rates. At constant scope, all of these sectors
posted strong growth of respectively +4.6% bovine, +3.1% industrial (swine and
poultry) and +4.3% in aquaculture.

Outlook

Like most pharmaceutical sites in Puerto Rico, our Sentinel Spectrum
manufacturing partner was affected by recent climate events. Remember that the
transfer of Sentinel Spectrum production to the St. Louis site is now entering
its final phase. Note that Sentinel Tabs are not manufactured in Puerto Rico. To
date, and considering the information available, the Group does not foresee any
interruptions to the supply chain either at the clinics level or at the
distributors level, which in the latter case is conditional on routing within
weeks to come to the United States of the products manufactured and present in
Puerto Rico, which have not suffered any damage.

The Group confirms the outlook for 2017:
* net revenue and EBITA (current operating profit before depreciation of
assets arising from acquisitions) expressed as a percentage of sales to be
stable compared to 2016 at constant exchange rates,
* ?30-50 million debt reduction.


Key figures


NET REVENUE
Year-to-date September 2017
?630.2 million
(_________)

TOTAL GROWTH
-2.5%
(_________)

GROWTH AT CONSTANT EXCHANGE RATES(1)
-3.5%
(_________)

GROWTH AT CONSTANT SCOPE(1)
-3.5% (+2.1% excl. US)


of which:
COMPANION ANIMALS
-9.5% (-0.4% excl. US)

FOOD PRODUCING ANIMALS
+4.2%





CONSOLIDATED DATA Evolution at Evolution at
Unaudited - in constant constant
million Euros 2017 2016 Change exchange rates scope(1)

Net revenue - 1(st) 199.7 211.4 -5.5% -8.3% -8.3%
quarter
-------------------------------------------------------------------------------
Net revenue - 2(nd) 237.8 218.6 +8.8% +7.0% +7.0%
quarter
-------------------------------------------------------------------------------
Net revenue - 3(rd) 192.7 216.2 -10.9% -9.4% -9.4%
quarter
-------------------------------------------------------------------------------
Net revenue - Year-to- 630.2 646.2 -2.5% -3.5% -3.5%
date September
-------------------------------------------------------------------------------

(1 )The change at constant exchange rates and scope corresponds to organic
growth in sales excluding fluctuations in exchange rates by calculating the
indicator for the year in question and that of the previous financial year based
on identical exchange rates (the exchange rate used is that of the previous
financial year), and excluding change in scope by calculating the indicator for
the financial year in question based on the consolidation scope of the previous
financial year.


Virbac: 2017 Q3:
http://hugin.info/136717/R/2141577/820219.pdf



This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.

Source: Virbac via GlobeNewswire






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Date: 10/12/2017 - 11:45
Language: English
News-ID 1524218
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