CARACAS: Zoetis Inc. reported that its net income attributable to the company increased to $165 million from the prior year’s $155 million, with earnings per share improving to $0.33 from $0.31 last year. The company also updated its guidance for full year 2015 and provided additional details on its outlook for 2016 and 2017 to reflect the impact of the operational efficiency plans and other factors.
Adjusted earnings per share was $0.41, up from $0.38 in the prior year.
Revenue for the quarter grew to $1.102 billion from $1.097 billion in the prior year.
Analysts polled by Thomson Reuters expected the company to report earnings of $0.37 per share and revenues of $1.11 billion for the quarter. Analysts’ estimates typically exclude special items.
The company said it Continues to re-shape its supply network, including plans to sell or exit 10 manufacturing sites over the long term. It will change its selling approach in approximately 30 markets by shifting to indirect sales or reducing its presence in certain countries. It will consolidate from a four-region structure to a two-region structure — U.S. and International. The U.S Region will be led by Kristin Peck, and the International Region will be led by Clint Lewis; both are current members of the Zoetis executive team.
The company will reduce management layers, increasing spans of control and operating more efficiently as a result of less internal complexity and more standardization of processes
The implementation of initiative increases the company’s outlook for 2017 operating profit by $200 million, driven by $300 million in expected cost savings, which is expected to more than offset a reduction of revenue and gross profit of $280 million and $100 million, respectively.
Separately, the company has decided to reduce its business in Venezuela. The impact of this change will reduce the company-wide outlook for 2017 revenue, gross profit, and operating profit by approximately $90 million, $65 million, and $55 million, respectively.
As a result of the operational efficiency initiative and supply network strategy, Zoetis expects to record restructuring charges and other one-time cash charges of $400 million – $500 million, primarily by the end of 2016. Additional, primarily non-cash charges related to the company’s long-term supply network strategy will occur as the specific plans for each manufacturing site are finalized in the coming years.
The company updated its financial guidance for full year 2015 to reflect the impact of the operational efficiency program, a reduction of its presence in Venezuela, and changes in foreign exchange rates. It expects Reported earnings per share to be between $0.79 to $1.02 per share, Adjusted earnings per share of $1.61 to $1.68 per share, revenue of $4.675 billion to $4.775 billion. Wall Street currently is looking for fiscal year 2015 earnings of $1.65 per share on annual revenues of $4.86 billion.
For 2016, the company expects reported earnings per share to be in the range of $1.45 to $1.65, Adjusted earnings per share of $1.81 to $1.93, and revenue of $4.650 billion to $4.800 billion. Analysts expects the company to report earnings of $1.88 per share and revenues of $5.15 billion for fiscal 2016.
The company also provided updates to its long-term outlook for 2017. It anticipates Reported earnings per share of $1.98 to $2.16 per share, Adjusted earnings per share of $2.18 to $2.32 and revenue of $4.850 billion to $5.050 billion.
