2018 annual revenue grew by +4.5% at constant exchange rates

¹ Growth at constant exchange rates and scope is the organic growth of sales, excluding the impact of exchange rate changes, by calculating the indicator for the financial year in question and that for the previous financial year on the basis of identical exchange rates (the exchange rate used is that in effect for the previous financial year), and excluding the impact of changes in scope, by calculating the indicator for the financial year in question on the basis of the scope of consolidation for the previous financial year.

Quarterly consolidated revenue
Group revenue reached €234.5 million in the fourth quarter, an increase of +1.2% at real rates when compared to the same period in 2017. At comparable exchange rates, fourth quarter revenue shows moderate growth of +1.8% (+4.1% outside the United States). The quarter's growth is mainly driven by activity in Latin America, excluding Chile, which continues to benefit in particular from Brazil's double-digit growth, and by Asia, driven in particular by sustained activity in India and China. In the United States, ex-Virbac sales are down in the fourth quarter compared to 2017, as a result of a very unfavorable base effect compared to the same period in 2017, which had a significant restocking at the distribution level. It should be noted that ex-distributor sales in the United States of Virbac products to veterinary clinics grew overall by +13% compared to 2017 (+26% outside of heartworm products, in which the Sentinel range was stable). In terms of ranges, the companion animal sector grew by +1.4% at constant rates for this period (+7.5% outside the United States), with noteworthy growth in the vaccine, internal parasiticide, petfood and dental ranges offsetting the decline in Sentinel ranges for the quarter, due to the stock effects. The food producing segment grew by +1% at constant rates thanks to vaccines and food supplements for cattle.

Annual year-to-date revenue
Revenue reached €868.8 million versus €861.9 million over the same period in 2017, recording total growth of +0.8%. Excluding the negative effect of exchange rates, notably the Indian rupee, the Brazilian real, the Australian and American dollar, revenue is growing at +4.5%.

In the United States, activity grew by +2.4% at real rates, including +5.7% at comparable exchange rates, steadily improving since the beginning of the year. This growth is attributable to strong performance by the dental ranges, specialty products, internal parasiticides (launch of Iverhart Max Soft Chew), and revenue from toll production contracts initiated in 2018. Lastly, it should be noted that, overall, inventories of US products, in the distribution are at levels below those at the end of 2017, which had an estimated impact of about $10 million on 2018 sales. It should be noted that sales ex-distributor in the United States of Virbac products to veterinary clinics are showing strong overall growth of +7% for the year. The Sentinel range remains stable for the period, despite competitive pressure, and the other ranges, excepting heartworm products, show noteworthy growth of +21% on average in 2018.

Outside the United States, the Group shows growth of +0.5% at real rates in 2018, and strong organic growth of +4.4%. Europe shows growth of +2.4% at real rates, including +2.7% at constant rates, due to a fair contribution by France, the United Kingdom, and Germany in particular, offsetting difficulties encountered in Southern Europe (competition facing the vaccine against canine leishmaniosis, declining antibiotic sales in Spain and the halt in sales of rabies bait vaccines in Greece in 2018). In the rest of the world, the Asia-Pacific zone shows a change of -1.0%, including +5.8% at constant exchange rates (+7.2% excluding an unfavorable base effect related to licensing revenue recognized in 2017), mainly due to momentum in India, China, New Zealand and Australia. Growth in Latin America, excluding Chile, amounted to +5.0% at real rates and +15.5% at constant rates, buoyed by strong growth in all countries, particularly Brazil and Mexico. Lastly, Chile shows a decline of -11.6% at real rates, including -8.8% at constant rates, due in particular to weaker antibiotic and oral vaccine sales compared to the same period in 2017.

In terms of species, revenue in the companion animal sector is rising overall by +3.9%, including +6.4% at constant exchange rates. The ranges showing the most significant growth are petfood, the specialty ranges, the dental range and vaccines, which offset the decline in parasiticide ranges.

In the food producing animal segment, total change amounted to -3.0%, including +2.2% (+5.7% excluding aquaculture) at constant exchange rates. Exclusive of changes, performances were mixed: the bovine sector shows strong growth at +7.2%, driven by bovine vaccines and nutritional products, industrial (swine and poultry) is stable, while aquaculture shows a decline of -17.3%, essentially tied to weaker sales of antibiotics and oral vaccines for salmon.

Outlook

For 2018, the Group anticipates the ratio of current operating profit before depreciation of assets arising from acquisitions to revenue, should increase, as expected, by around 1 point at constant exchange rates compared to 2017. Debt relief continued over the half year, which is expected to result in a greater reduction in net debt than that anticipated at constant rates. The Group's net debt to Ebitda ratio is expected to be below the financial covenant of 4.25 at the end of December 2018, as negotiated with the Group's banking partners.

The Group's financing is ensured primarily through an RCF (Revolving credit facility) line of 420 million euros, maturing in 2022, as well as bilateral bank loans, financing by the European investment bank (EIB) and Schuldschein disintermediated contracts, whose terms are between four and ten years.

Focusing on animal health from the beginning
Virbac offers veterinarians, farmers and pet owners in more than 100 countries a comprehensive and practical range of products and services. With these innovative solutions covering the majority of animal species and diseases, Virbac contributes day after day to shape the future of animal health.