May 9, 2022
Zoetis announces first quarter 2022 results
Zoetis Inc. reported on May 5 its financial results for the first quarter of 2022 and updated its guidance for 2022 due to the negative impact of recent changes in foreign exchange rates.
The updated guidance reflects the same operational growth rates for revenue and adjusted net income as stated in the company's previous guidance for 2022.
The company reported revenue of US$2.0 billion for the first quarter of 2022, an increase of 6% compared with the first quarter of 2021. Net income for the first quarter of 2022 was US$595 million, or US$1.26 per diluted share, an increase of 6% and 8%, respectively, on a reported basis.
Adjusted net income for the first quarter of 2022 was US$625 million, or US$1.32 per diluted share, an increase of 4% and 5%, respectively, on a reported basis. Adjusted net income for the first quarter of 2022 excludes the net impact of US$30 million for purchase accounting adjustments, acquisition-related costs and certain significant items.
On an operational basis, revenue for the first quarter of 2022 increased 9%, excluding the impact of foreign currency. Adjusted net income for the first quarter of 2022 increased 8% operationally, excluding the impact of foreign currency.
"Zoetis delivered another strong quarter, with 9% operational revenue growth and 8% operational growth in adjusted net income, driven by the strength of our companion animal portfolio," said Zoetis chief executive officer Kristin Peck. "Our strength across parasiticides, dermatology products, monoclonal antibodies for pain and diagnostics are all capitalising on the marriage of positive trends in petcare with the customer-driven science coming from Zoetis.
"As we look at the rest of the year, we are updating our guidance to reflect the negative impact of recent changes to foreign exchange rates, but this has no impact on our previous operational growth rates and assumptions for the year. Even as we face uncertainties related to the war in Ukraine, COVID-19 lockdowns, inflation and ongoing supply chain constraints, we remain confident in the underlying strength and performance of our business. Our diverse portfolio, global scale, talented colleagues and continuous innovations remain the foundation of our long-term success and durability."
Zoetis organises and manages its commercial operations across two segments: United States and international. Within these segments, the company delivers a diverse portfolio of products for companion animals and livestock, tailored to local trends and customer needs.
In the first quarter of 2022:
- Revenue in the US segment was US$1.020 billion, an increase of 9% compared with the first quarter of 2021. Sales of companion animal products increased 18%, driven by growth across the company's parasiticide portfolio, primarily from sales of Simparica Trio®. The key dermatology portfolio also significantly contributed to growth across both the Apoquel®and Cytopoint® brands.
Sales of livestock products declined 11% in the quarter. Sales of cattle products declined as a result of generic competition for Draxxin® and unfavorable conditions in beef and dairy markets, including increased input costs and dry weather conditions. Zoetis' poultry portfolio declined due to the expanded use of lower cost alternatives and generic competition for Zoamix®, the company's alternative to antibiotics in medicated feed additives.
Sales of swine products grew slightly as a result of favorable market conditions for producers and increased disease prevalence.
Revenue in the international segment was US$948 million, an increase of 3% on a reported basis and an increase of 8% operationally compared with the first quarter of 2021.
Sales of companion animal products increased 17% on a reported basis and 23% operationally. Growth resulted from increased sales of the company's key dermatology portfolio across both the Apoquel and Cytopoint brands, as well as the recently launched monoclonal antibody products for osteoarthritis pain, Librela® and Solensia®. Sales in the Simparica portfolio, including Simparica Trio, also contributed to growth in the quarter.
Sales of livestock products declined 9% on a reported basis and declined 3% operationally. Sales of swine products decreased in the quarter as a result of falling pork prices due to an increased supply in China and a comparative period when pork prices were at an all-time high. Growth in the company's fish portfolio was primarily the result of increased sales of the Alpha Flux® sea lice treatment product and Alpha Ject® LiVac SRS vaccine in Chile.
Sales of cattle products grew due to favorable market conditions and price in key markets, including Brazil and Australia, as well as demand generation efforts in emerging markets such as Turkey and China. Growth in the poultry portfolio was primarily due to market growth, demand generation efforts and supply recovery in Australia, Mexico and Brazil.
Zoetis continues to gain market approvals and introduce lifecycle innovations for key brands. On the companion animal side of the business, the company received approval in Australia for Solensia (frunevetmab), the first injectable monoclonal antibody (mAb) for the alleviation of pain associated with osteoarthritis (OA) in cats; it is also approved in the US, the European Union, the United Kingdom, Canada and Switzerland. Another mAb therapy, Cytopoint (lokivetmab), received a claim extension in Canada. Previously approved for the treatment of atopic dermatitis in dogs, the product is now approved for allergic dermatitis as well.
On the livestock side of the business, Zoetis enhanced its cattle vaccine portfolio with approval in the US of Protivity®, the first modified live vaccine to offer protection against Mycoplasma bovis, providing cattle producers and veterinarians with broader overall protection against bovine respiratory disease (BRD). The company also gained approval in Brazil for Draxxin KP (tulathromycin ketoprofen). This injectable, also for the treatment of BRD, combines the antimicrobial properties of Draxxin with the nonsteroidal anti-inflammatory (NSAID) Ketoprofen to rapidly reduce fever in a single dose. It is also approved in the US, Canada, the EU (where it is known as Draxxin Plus), Australia and Mexico.
In poultry, the company received approval in Brazil for Poulvac® Procerta™ HVT-IBD. Also approved in the US and Canada, this recombinant vector vaccine provides early protection against Marek's disease and the contemporary infectious bursal disease (IBD) viruses in chickens.
In diagnostics, Zoetis announced the addition of artificial intelligence (AI) blood smear testing to its multi-purpose platform, Vetscan Imagyst™. Introduced in September 2020, Vetscan Imagyst is a first-of-its-kind technology with a multitude of applications, including AI fecal analysis, digital cytology image transfer and now AI blood smear, helping veterinarians broaden in-clinic diagnostic offerings to provide the best possible care for dogs and cats.
Zoetis is updating its full year 2022 guidance due to the negative impact of recent changes to foreign exchange rates, and this includes:
- Revenue between US$8.225 billion to US$8.375 billion;
- Reported diluted EPS between US$4.65 to US$4.77;
- Adjusted diluted EPS between US$4.99 to US$5.09;
This guidance reflects foreign exchange rates as of late April.