Zoetis reports 3rd Quarter Performance
Zoetis released its financial results for the third quarter of 2023, displaying robust performance. They reported an 8% increase in revenue and a 13% rise in adjusted net income. This impressive growth was underpinned by balanced expansion in both the international and U.S. segments, both of which saw an 8% surge. Zoetis maintains a positive outlook, anticipating double-digit operational growth in its companion animal portfolio and low single-digit operational growth in its livestock portfolio for the entire year.
Here are the key highlights from the earnings call:
Zoetis reported Q3 2023 revenue of $2.2 billion, representing a 7% increase on a reported basis and an 8% increase on an operational basis.
The company's adjusted net income reached $629 million, marking an 11% growth on a reported basis and a 13% growth on an operational basis.
The companion animal portfolio, powered by essential dermatology products, pet parasiticides, monoclonal antibodies for osteoarthritis pain, and diagnostics, experienced remarkable growth of 11%.
Zoetis anticipates achieving double-digit operational growth for its companion animal portfolio and low single-digit operational growth in its livestock portfolio for the year.
The company remains confident in maintaining its leading position in the market and continues to invest in its product portfolio and direct-to-consumer initiatives.
Despite uncertainties, especially in China and other regions, Zoetis foresees continued growth that surpasses market averages in 2023 and 2024.
During the earnings call, Zoetis reported substantial growth in its companion animal portfolio, particularly in key dermatology products, monoclonal antibodies for osteoarthritis pain, and Simparica Trio. U.S. companion animal revenue surged by 11%, driven by the success of the dermatology portfolio, Simparica Trio, and Solensia. The international segment also displayed growth, with international companion animal revenue growing by 12% on an operational basis, and livestock expanding by 5% operationally.
Zoetis is poised for ongoing growth in 2024, driven by its innovative product portfolio and effective commercial execution. The company updated its guidance for the full year 2023, adjusting its revenue expectations due to unfavorable foreign exchange rates, while keeping operational growth expectations intact. Adjusted net income and diluted EPS were slightly lower than earlier projections. Zoetis also repurchased $250 million worth of its shares and anticipates capital expenditures for the full year to be in the range of $725 million to $750 million.
The company discussed the initial feedback and positive reception of Librela in U.S. veterinary practices, noting some initial clinic-level stocking without significant fluctuations in future quarters. Zoetis believes that Librela holds the potential to become a $1 billion portfolio and expand the market for osteoarthritis pain products.
Lastly, Zoetis highlighted the macro drivers in the animal health industry, including the humanization of pets and the increasing standards of care among millennial and Gen-Z pet owners. They anticipate these trends to persist into 2024 and beyond. Regarding supply plans for their product Librela, Zoetis expressed confidence in meeting demand expectations, citing the opening of a new facility in Lincoln. They also mentioned the growth of the livestock market, driven by a burgeoning middle class and increased protein consumption, with Zoetis aiming to lead the market by bringing innovation to these sectors.
“Today we reported strong third quarter results of 8% operational growth in revenue and 13% operational growth in adjusted net income, based on our diverse portfolio across markets and species," said Kristin Peck, Chief Executive Officer of Zoetis. “We showed balanced segment growth again this quarter, with 8% revenue growth in the U.S. and 8% operational revenue growth internationally. Our companion animal portfolio grew 11% operationally, driven by our major franchises in dermatology, pet parasiticides, osteoarthritis pain and diagnostics. Our livestock portfolio grew 3% operationally, driven by sales of poultry and cattle products.”
“We are on track to achieve our full-year operational guidance and have narrowed it around the mid-point of the range. We remain confident in the sustainable, underlying demand for animal health, as customers continue to place a premium on the animal health benefits our products deliver. We are executing well on drivers where we have more control, like the successful launch of Librela® in the U.S., while also mitigating the downside of macroeconomic declines in China. Once again, our diverse portfolio across product categories and geographies provides us with durable, reliable, long-term growth.”
