Vetoquinol Shares Jump 16% as Portfolio Simplification Delivers 22% Profit Rise on Flat Sales

Vetoquinol has demonstrated that in a slowing animal health market, margin discipline now matters more than topline growth. First-half net income rose 22% to €30.5 million on revenue that edged up just 0.7% on a reported basis, with operating cash flow more than tripling — a combination that sent the French group’s shares up over 16%.

Revenue for the six months to 30 June reached €259.3 million, up 0.7% reported and 3.4% at constant exchange rates, with currency headwinds masking underlying momentum. EBIT rose 12.5% to €39.2 million, lifting the margin to 15.1% of sales from 13.5%. EBIT before amortisation of acquired assets reached €44.8 million, or 17.3% of sales.

The driver is portfolio quality rather than volume. Essentials products grew 3.7% at constant exchange rates to €169 million and now represent 65% of group sales, up from 64% a year earlier. Combined with the completed simplification of complementary product lines, this lifted gross margin to 77.1% from 75.8% — achieved while research and development spending rose to 8.7% of sales from 7.7%.

Cash generation was the standout. Operating cash flow reached €38.6 million against €12.4 million a year earlier, taking the net cash position to €223 million, up €17 million since the start of the financial year after dividends, working capital, capital expenditure and share buybacks. Shareholders’ equity stood at €609 million.
The United States, Vetoquinol’s largest market, grew 13.1% in dollar terms.

Chairman and chief executive Matthieu Frechin said the results confirmed the strength of the business model, pointing to several new product launches ahead.