In a November 3rd release, Zoetis Inc. (ZTS) posted financial results for the third quarter of FY 2022. The Company can be regarded as an indicator of the status of enterprises manufacturing pharmaceuticals, biologics and nutritional additives for companion animals and livestock industries in the Americas, Asia and Europe. Along with competitors Elanco, Phibro, Merck, and Boehringer-Ingelheim, all are subject to the risks of currency fluctuation, disruption of supply-chains and increased costs for products, labor and transport in a competitive environment with livestock producers and consumers impacted by inflation.
For the third quarter of FY 2022 ending September 30th 2022, net income attained $529 million on revenue of $2,002 million. Comparable figures for the third quarter of fiscal 2021 ending September 30th were net income of $552 million on total revenue of $1,990 million. Diluted EPS attained $1.13 for the most recent quarter of fiscal 2022 compared to $1.16 for the third quarter of 2021. Gross margin for the third quarter of 2022 was 69.6 percent (70.5 percent Q3 2021) and operating margin was 38.0 percent (38.6 percent Q3 2021)
In reviewing the components of revenue for the third quarter of FY 2022 the Companion Animal Segment represented 63.4 percent of Company revenue with Livestock accounting for 35.4 percent (32.5 percent). Within this segment, cattle comprised 52 percent; poultry, 16 percent; swine, 18 percent with aquaculture and other species contributing to the difference. Sales to the International segment of livestock amounted to 49 percent (68 percent) with the remainder derived from the U.S.
No new breakthrough products for poultry were released in the most recent quarter. During the second quarter Zoetis expanded its poultry vaccine portfolio in the U.S. with the approval of Poulvac® Procerta® HVT-IBD-ND, a trivalent vector vaccine that protects against Marek’s disease, infectious bursal disease and Newcastle disease.
In reviewing results Kristin Peck, CEO stated, "As the world continues to face dynamic market conditions and uncertainty in the global economy, our business has been tested and continues to perform well based on our diverse, durable product portfolio and global scale.” She added "In the third quarter, we delivered five percent operational revenue growth, reflecting steady performance across our innovation-driven companion animal portfolio, especially internationally. We reported two percent operational growth in adjusted net income this quarter. This lower than usual growth on the bottom line was due primarily to a more favorable tax rate in the year-ago quarter.” Ms. Peck concluded “While we remain confident in the strength and growth drivers of our business, we are lowering 2022 guidance to reflect lower than expected sales in the second half of the year related to continued supply constraints, veterinary workforce challenges and recent changes to foreign exchange rates”.
Guidance for FY 2022 included revenue reduced to a range of $8,000 to $8,075 million; adjusted net income of $2,270 to $2,310 million and a raised diluted EPS ranging from $4.51 to $4.59.
On September 30th 2021 Zoetis posted assets of $13,674 million of which $4,172 million comprised intangibles and goodwill against long-term debt of $5,210 million. The Company had an intraday market capitalization of $62,580 million on November 8th 2022. ZTS currently trades with a forward P/E of 24.3 and has ranged over the past 52-weeks from $124.15 to $249.27 with a 50-day moving average of $151.70. Twelve month trailing operating margin was 35.5 percent and profit margin 25.8 percent. Return on assets was 12.9 percent and 44.2 percent on equity. At close of trading on November 2nd pre-release ZTS priced at $148.85 opening on November 3rd post-release at $127.00 based on lowered guidance and the bottom line.