Zoetis, formerly the animal health business of Pfizer Inc., on April 30 reported its financial results for the first quarter of 2013. The company reported revenues of $1.09 billion for the first quarter, an increase of 4 percent from the first quarter of 2012. Revenues reflected an operational increase of 5 percent, with foreign currency having a negative impact of 1 percent.
Net income for the first quarter of 2013 was $140 million, or $0.28 per diluted share, an increase of 26 percent and 27 percent, respectively, compared to the first quarter of 2012. Adjusted net income for the first quarter of 2013 excludes the net impact of $39 million, or 8 cents per diluted share, for purchase accounting adjustments, acquisition-related costs and certain significant items. Adjusted net income for the first quarter of 2013 was $179 million, or $0.36 per diluted share, an increase of 18 percent and 20 percent, respectively, compared to the first quarter of 2012.
The recently formed company, which closed its public offering in February, derived its financial statements for 2012 and prior years from the consolidated financial statements and accounting records from Pfizer, Zoetis Chief Financial Officer Richard Passov said during a conference call with shareholders. Those figures include allocations for direct and indirect costs, which were attributed to the animal health business for Pfizer.
"At Zoetis, we are committed to delivering high-quality medicines and vaccines to the veterinarians and livestock producers we serve around the world, and building on our premier commercial, research and development, and manufacturing capabilities to maintain our market leadership," said Juan Ramón Alaix, chief executive officer of Zoetis. "As a newly formed stand-alone company, we are singularly focused on the animal health industry to improve our ability to serve those who raise and care for animals."
"During the first quarter, we reported operational sales growth across all of our regions, reflecting global demand for our diverse portfolio of livestock and companion animal health products," said Alaix. "We also increased our earnings at a faster rate than sales, as we continue to grow Zoetis profitably through appropriate allocation of resources and the pursuit of our growth strategies. Our diverse portfolio, strength in R&D, and direct presence in global markets continue to provide a solid foundation for our business performance."
Zoetis organizes and manages its business across four regional operating segments: the United States, Europe/Africa/Middle East, Canada/Latin America, and Asia/Pacific. Within each of these regional segments, the company offers a diverse portfolio of products for livestock and companion animals tailored to local trends and customer needs.
In the first quarter of 2013:
- Revenues in the U.S. were $454 million, an increase of 7 percent over the first quarter of 2012. Results were driven by strong growth in sales of companion animal products in the region. While sales of livestock products increased, they were tempered by the continuing drought in North America and its impact on livestock producers, particularly cattle.
- Revenues in EuAfME were $290 million, an increase of 4 percent operationally over the first quarter of 2012. Growth drivers included sales of companion animal products, and increased sales of livestock products, especially in swine and poultry across the European Union.
- Revenues in CLAR were $171 million, an increase of 4 percent operationally over the first quarter of 2012. Sales of livestock products for swine, cattle and poultry contributed to the region's growth, especially in Brazil and Canada; meanwhile, sales of companion animal products decreased in the region.
- Revenues in APAC were $175 million, an increase of 2 percent operationally over the first quarter of 2012. Results were driven by the sales of livestock products, especially swine, with growth in Australia, New Zealand and Southeast Asia, while sales of companion animal products increased.
Other recent highlights
- In Japan, the company recently achieved registration of Fostera PCV and also launched Draxxin for swine. Fostera PCV is a vaccine, preventing Porcine Circovirus Type 2 viremia with the convenience of a single dose; it helps limit the very costly consequences of disease that could compromise herd health and performance. The company's PCV vaccine was first approved in the U.S. in 2006, under the Suvaxyn brand, and is currently commercialized in 23 countries worldwide. Draxxin is an injectable antibiotic for livestock that delivers a full course of therapy in one dose to fight respiratory disease and other susceptible bacterial infections in cattle and swine. Draxxin was first approved in Europe in 2003 and is now one of Zoetis' top-selling products, marketed in 69 countries around the world.
- The company launched Convenia, an antibiotic for companion animals, in China this March. Convenia is the first anti-infective for common bacterial skin infections in dogs and cats that provides an entire course of therapy in one injection without the difficulty of administering daily pills. It was first approved in the European Union in 2006 and now marketed in 50 countries; it has become one of the company's premier companion animal products.
- Zoetis also signed an agreement with a large dairy cattle partner in Argentina to perform genomic tests on their herds, using Clarifide, a novel technological tool that is being tailored to meet the farming needs of this customer in Argentina. Through the use of these tests, Zoetis helps producers make informed decisions, manage their livestock more effectively, and increase the yields from their herds.
"Our guidance for full-year 2013 is provided at current exchange rates and reflects our confidence in the diversity of our portfolio, the strength of our business model, and our view of the evolving market conditions for animal health products this year," said Passov. "While we believe the fundamentals of the animal health industry remain strong, the key factors that could impact future results continue to be the evolving macroeconomic conditions, weather-related challenges and potential disease outbreaks. We rely on our global scale, local presence and innovations to enable us to best adapt to changes in our operating environment."
Zoetis provided its financial guidance for full-year 2013, including revenues of between $4.425 billion to $4.525 billion. The company also expects to achieve diluted earns per share for the full year of between $1.00 to $1.06 per share, which includes the impact of nonrecurring costs of $200 million to $240 million, primarily associated with becoming a stand-alone public company. Adjusted diluted earns per share for the full year is expected to be between $1.36 to $1.42 per share, excluding purchase accounting adjustments, acquisition-related costs and certain significant items. The 2013 financial guidance reflects exchange rates as of mid-April 2013.