Zoetis sees income drop, but stands by bold revenue projections

Jessica Perry//August 6, 2013

Zoetis sees income drop, but stands by bold revenue projections

Jessica Perry//August 6, 2013

Zoeits Inc., the New Jersey-based animal health unit spun off of Pfizer Inc., said second-quarter net income declined 26 percent, largely due to one-time charges from becoming a standalone company, while revenue rose 2 percent.

The Florham Park company reaffirmed revenue and profit guidance for the full year, projecting between $4.425 billion and $4.525 billion in revenue and $1 to $1.06 earnings per share for 2013.

“Our anticipated growth reflects confidence in the diversity of our portfolio, strength of our business model” and expectations of better market conditions for the remainder of the year, Chief Financial Officer Rick Passov said in a conference call today.

Net income for the second quarter was $128 million, or 26 cents a share, a decrease of 26 percent of second quarter of 2012. The company said the second quarter included $77 million in one-time charges from becoming a standalone company, including changes to branding, legal costs and other items.

After factoring all one-time charges and gains, Zoetis said second-quarter adjusted earnings reached $178 million, or 36 cents per share, increases of 1 percent and 3 percent, respectively, from year-ago results.

Zoetis completed its initial public offering in February and formally opened Florham Park in June, where it employs about 400. Previous headquarters were in Madison.

Zoetis reported $1.1 billion revenue in the second quarter, an increase of 2 percent from the year-ago period. Global growth ranged from four to seven percent across its regions from North and South America to Asia, while Europe lagged at about 1 percent growth.

Zoetis said cold weather and general economic weakness in Europe hurt sales of cattle products there, and drought conditions in the southwest affected U.S. revenue, which grew 4 percent. The company expects improvement in the second half of 2013.

Speaking about the animal health business model in general, CEO Juan Ramon Alaix said industry analysts expect 5 to 7 percent growth annually. He said the trend reflects growing populations and disposable incomes in emerging markets, which will increase demand for consumption of animal proteins and lead to more pet ownership.

“We are confident that growth is realistic,” Alaix said.

Zoetis in the second quarter received U.S. Food and Drug Administration approval for Apoquel, which treats dogs for itching problems associated with allergies. Zoetis is working toward gaining approval of Apoquel in the European Union.

Reporter Tom Zanki is @BizTZanki on Twitter.