By Chelsey Dulaney
Animal-health company Zoetis Inc. swung to a loss in its second
quarter on costs related to its restructuring plans, though revenue
and adjusted profit topped expectations as sales of its pet and
livestock medicines grew.
For the year, Zoetis lifted the bottom end of its adjusted
earnings guidance by two cents, to a range of $1.63 to $1.68 a
share. The company also bumped up the bottom end of its revenue
guidance, now forecasting $4.7 billion to $4.78 billion.
Zoetis, which was spun off by drug company Pfizer Inc. in 2013,
is the world's leading seller of vaccines and medicines for
livestock and household pets by sales.
In June, The Wall Street Journal reported that Valeant
Pharmaceuticals International Inc. made a preliminary approach to
buy Zoetis.
Executives at Zoetis have said they are interested in buying
assets to expand, but the company has long been considered by
analysts to be a potential takeover target.
The expectation Zoetis could sell itself increased when activist
investor William Ackman took an 8% stake in the company last
November and then gained a board seat. Mr. Ackman, who teamed with
another hedge fund on the investment, Sachem Head Capital
Management LP, was expected to push Zoetis to cut costs and
consider any potential buyout offers, The Wall Street Journal
reported.
In May, Zoetis announced plans to cut $300 million in costs by
2017, including laying off at least 20% of its 10,000
employees.
In the latest quarter, the company's pet-drug sales grew 15% on
an operational basis, which excludes currency impacts. Zoetis has
been integrating pet products it recently bought from Abbott for
$255 million.
Livestock sales grew 8% on an operational basis.
In all, Zoetis reported a loss of $37 million, or seven cents a
share, compared with a prior-year profit of $136 million, or 27
cents a share.
The quarter included $263 million in charges related to its
restructuring plans. Excluding that charge and other items,
per-share earnings were 43 cents a share.
Revenue inched up 1.5% to $1.18 billion.
Analysts polled by Thomson Reuters had forecast 38 cents a share
in earnings on $1.12 billion.
Write to Chelsey Dulaney at chelsey.dulaney@wsj.com
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