Zoetis Inc. reported revenue of $1.2 billion for the second quarter of 2014, an increase of 4 percent from the second quarter of 2013. Revenue reflected an operational increase of 6 percent, with foreign currency having a negative impact of 2 percentage points.
Net income for the second quarter of 2014 was $136 million, or $0.27 per diluted share, an increase of 6 percent and 4 percent, respectively, compared to the second quarter of 2013. Adjusted net income for the second quarter of 2014 was $189 million, or $0.38 per diluted share, an increase of 6 percent compared to the second quarter of 2013. Adjusted net income for the second quarter of 2014 excludes the net impact of $53 million, or $0.11 per diluted share, for purchase accounting adjustments, acquisition-related costs and certain significant items. On an operational basis, adjusted net income for the second quarter of 2014 increased 11 percent, with foreign currency having a negative impact of 5 percentage points.
"In the second quarter, we generated 6 percent operational growth in revenue, based on the strong performance of our livestock products,” said Zoetis CEO Juan Ramón Alaix. “We benefited from positive economic conditions for livestock producers versus the year-ago quarter, especially in the U.S., Canada and Brazil. This performance helped offset the impact of the PED virus in swine and slower growth in companion animal products.”
Regional segments
Zoetis organizes and manages its business across four regional operating segments: the United States (U.S.); Europe/Africa/Middle East (EuAfME); Canada/Latin America (CLAR); and Asia/Pacific (APAC).
In the second quarter of 2014:
Revenue in the U.S. was $459 million, an increase of 5 percent compared to the second quarter of 2013. Sales of livestock products grew 10 percent with contributions across cattle, poultry and swine. Cattle products showed a significant increase based on improved market conditions from the year-ago quarter. Poultry product sales grew, benefiting from new vaccines and growth in medicated feed additives. Swine products benefited from continued growth in new products, tempered by the effect of porcine epidemic diarrhea (PED) virus.
Revenue in EuAfME was $284 million, an increase of 4 percent operationally compared to the second quarter of 2013. Sales of livestock products increased 5 percent operationally as the region experienced more positive results in Germany, the U.K. and Spain, but this was slightly offset by declines in France. The livestock growth was primarily driven by increased sales in poultry and cattle products, which were slightly offset by a decline in swine products for the quarter.
Revenue in CLAR was $214 million, an increase of 11 percent operationally compared to the second quarter of 2013. Overall for the segment, sales of livestock products grew 13 percent operationally and sales of companion animal products grew 6 percent operationally. The CLAR segment results were largely driven by growth in its two largest markets, Brazil and Canada, as well as Venezuela and Argentina. In Brazil, there was significant growth driven primarily by sales of cattle and poultry products as well as companion animal products. Meanwhile, the company generated increased sales of cattle products in Canada, as higher prices for cattle led to increased treatments. Canada also saw an increase in sales of swine products such as anti-infectives and vaccines, while it posted a slight decline in poultry products. Venezuela and Argentina grew sales of livestock products, reflecting price increases in these high inflationary markets.
Revenue in APAC was $185 million, an increase of 5 percent operationally compared to the second quarter of 2013. Sales of livestock products grew 7 percent operationally, driven primarily by sales of cattle products in New Zealand and Australia; growth of swine products in China; and growth of poultry products in Australia and India. This livestock growth was offset by declines in Japan and Korea.
