(News Bulletin 247) – The veterinary laboratory is lowering its financial targets for 2023, which were confirmed last April. In the meantime, the situation in the animal health market has deteriorated further. At the same time, Virbac was the victim of a cyberattack.

Virbac believed in it. Despite a slowdown in the growth of the animal health market in the first months of 2023, the maralpin laboratory confirmed in April its financial objectives for the entire current financial year.

But in the meantime, the market situation in which Virbac operates has deteriorated with, in many regions, volumes down compared to 2022, explains the company in a press release published Monday evening after the market.

The veterinary laboratory also puts forward temporary limitations in its production capacity for vaccines for dogs and cats, which prove to be “greater” than expected by the company in this first half. This situation weighs on Virbac’s absorption of fixed costs as well as on its sales, given the low level of its vaccine stocks.

Many headwinds

In its press release, the veterinary laboratory also explains that it was the victim of a cyberattack on June 19, of which it says it is not yet “able to assess all the consequences”. Virbac says it is fully mobilized “to ensure business continuity and implement remediation plans, the deployment of which is continuing with efficiency and speed”.

These various elements have therefore led Virbac to abandon its growth and adjusted EBIT (current operating income) margin forecasts for 2023, the group not being able to catch up by the end of the year. . The group thus wished to take the lead, ahead of the publication of its half-yearly turnover. It is scheduled for Tuesday July 18 after the market, according to the indicative timetable provided by Virbac.

A slowdown that should bother Vetoquinol

The company now expects to deliver revenue growth (at constant currency and perimeter) in the range of 0% to 4%, compared to an initial forecast of between 4% and 6%. As for the adjusted EBIT margin, it will be between 12% and 13% at constant exchange rates when Virbac was still counting on an indicator of between 13% and 14%.

“Considering an average organic growth of 2% vs. 5% and an adjusted EBIT margin of 12.5% ​​vs. 13.5%, the impact on EPS (earnings per share) should be around 9%”, indicates Stifel in its note devoted to the warning on results issued by Virbac.

The laboratory, however, confirms its forecasts for 2030, on the basis of a “positive dynamic” of its activity in many regions. But the market ignores this confirmation of the objectives for 2030. It only retains the confirmation of a slowdown in the animal health market, which should also “embarrass” its competitor Vetoquinol, advances the research department.

Unsurprisingly, investors are skittish about this earnings warning. The title, initially reserved for the fall on Tuesday morning, is currently down 8.7% at 247.50 euros on Tuesday morning around 10:30 a.m. It drags in its wake its rival Vetoquinol which for its part yields 4.3%.

“Given that two of the three explanations for the profit warning are specific to Virbac”, Stifel was indeed expecting a less strong stock market reaction on the Vetoquinol share than on the Virbac share.