Zoetis(US:ZTS)2025-08-05 11:05Financial Performance - Zoetis reported revenue of $2.5 billion for Q2 2025, a 4% increase compared to Q2 2024, with an 8% increase on an organic operational basis [3]. - Net income for Q2 2025 was $718 million, or $1.61 per diluted share, reflecting a 15% and 18% increase, respectively, on a reported basis [3]. - Adjusted net income for Q2 2025 was $783 million, or $1.76 per diluted share, marking a 10% and 13% increase on both a reported and organic operational basis [4]. - Revenue for the three months ended June 30, 2025, was $2,460 million, a 4% increase from $2,361 million in 2024 [20]. - Net income attributable to Zoetis Inc. for the three months ended June 30, 2025, was $718 million, up 15% from $624 million in 2024 [20]. - Earnings per share attributable to Zoetis—diluted for the three months ended June 30, 2025, was $1.61, an 18% increase from $1.37 in 2024 [20]. - For the six months ended June 30, 2025, revenue was $4,680 million, a 3% increase from $4,551 million in 2024 [20]. - Net income attributable to Zoetis for the six months ended June 30, 2025, was $1,349 million, a 10% increase from $1,223 million in 2024 [20]. - Earnings per share attributable to Zoetis—diluted for the six months ended June 30, 2025, was $3.02, a 13% increase from $2.67 in 2024 [20]. - The company reported a total earnings increase of 16% to $902 million for the three months ended June 30, 2025 [54]. Revenue Guidance - Zoetis raised its full year 2025 revenue guidance to between $9.450 billion and $9.600 billion, expecting organic operational revenue growth of 6.5% to 8.0% [4]. - Full year 2025 revenue guidance is projected to be between $9,450 million and $9,600 million, with organic operational growth expected between 6.5% and 8.0% [39]. - Adjusted diluted EPS for 2025 is expected to be between $6.30 and $6.40, an increase from the prior guidance of $6.20 to $6.30 [39]. Segment Performance - U.S. segment revenue was $1.4 billion, a 4% increase year-over-year, with a 7% increase on an organic operational basis [5]. - International segment revenue reached $1.1 billion, a 3% increase on a reported basis and a 9% increase on an organic operational basis [5]. - Companion Animal revenue increased by 8% to $1,788 million, while Livestock revenue decreased by 8% to $638 million [44]. - U.S. revenue for the three months was $1,356 million, up 4% from $1,308 million, with a gross margin of 84.7% [54]. - International revenue for the three months was $1,070 million, a 3% increase, with operational revenue growth of 5% [50]. - Livestock revenue in the U.S. decreased by 21% to $180 million, while international livestock revenue decreased by 2% to $458 million [44]. Expenses and Costs - Research and development expenses for the three months ended June 30, 2025, were $172 million, a slight increase of 1% from $171 million in 2024 [20]. - Total costs and expenses for the three months ended June 30, 2025, were $1,558 million, compared to $1,581 million in 2024, reflecting a decrease of 1% [20]. - Selling, general and administrative expenses for the six months ended June 30, 2025, were $1,180 million, a 5% increase from $1,128 million in 2024 [20]. - Adjusted cost of sales for the six months ended June 30, 2025, was $1,267 million, representing a 3% decrease from $1,309 million in 2024 [36]. - Corporate costs rose by 1% to $592 million, while purchase accounting adjustments decreased by 10% to $65 million [61]. - Acquisition and divestiture-related costs decreased by 80% to $1 million, indicating reduced activity in this area [61]. Product Development and Approvals - Zoetis received several new product approvals, including Simparica Trio in Japan and Revolution Plus in Australia, enhancing its product portfolio [7][8]. - The company expects significant product approvals in major markets annually for the next several years, indicating a strong pipeline for future growth [6]. - The company continues to focus on research and development, which is included in other business activities [62]. Operational Efficiency - Significant items for the three months ended June 30, 2025, totaled $47 million pre-tax, compared to $70 million in 2024 [31]. - Certain significant items showed a 30% decrease in costs to $53 million, reflecting improved operational efficiency [61]. - The overall gross profit margin improved from 81.8% to 84.0% in the U.S. segment [61]. - The effective tax rate on adjusted income is expected to be approximately 21% for 2025, consistent with prior guidance [39]. Business Transformation - The company is undergoing a multi-year business process transformation program, which includes the implementation of a new ERP system [34].