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6 MONTHS: ZOETIS SALES UP 2%, NET INCOME UP 9%
Source: Zoetis news release

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Zoetis Inc. (NYSE:ZTS) today reported its financial results for the second quarter of 2014. The company reported revenue of $1.2 billion for the second quarter of 2014, an increase of 4% from the second quarter of 2013. Revenue reflected an operational2 increase of 6%, with foreign currency having a negative impact of 2 percentage points.

Net income for the second quarter of 2014 was $136 million, or $0.27 per diluted share, an increase of 6% and 4%, respectively, compared to the second quarter of 2013. Adjusted net income for the second quarter of 2014 was $189 million, or $0.38 per diluted share, an increase of 6% compared to the second quarter of 2013.

Adjusted net income for the second quarter of 2014 excludes the net impact of $53 million, or $0.11 per diluted share, for purchase accounting adjustments, acquisition-related costs and certain significant items. On an operational2 basis, adjusted net income for the second quarter of 2014 increased 11%, with foreign currency having a negative impact of 5 percentage points.

EXECUTIVE COMMENTARY

"In the second quarter, we generated 6% operational growth in revenue, based on the strong performance of our livestock products," said Zoetis Chief Executive Officer Juan Ramón Alaix. "We benefited from positive economic conditions for livestock producers versus the year-ago quarter, especially in the U.S., Canada and Brazil.

This performance helped offset the impact of the PED virus in swine and slower growth in companion animal products. Sales of Apoquel, which continues to have limited supply, contributed to our growth in companion animal revenue and were somewhat offset by increased competition in other product areas."

"We also saw operational growth in revenue across all our geographical segments in the quarter, reflecting the strength and balance of our diverse portfolio," Alaix said. "Our continued focus on building strong customer relationships, bringing new products to market while managing product lifecycles, and producing high-quality products with reliable supply, all remain fundamental strengths of our business model."

"In the second quarter, we grew adjusted earnings faster than sales, while facing higher expense growth driven primarily by the ramp-up of our corporate functions and timing of our promotional activities," said Glenn David, Senior Vice President of Finance Operations and Acting Chief Financial Officer of Zoetis. "We continue making progress on establishing our Zoetis systems and infrastructure as we complete our stand-up programs.

We remain confident in our business model and outlook, and we are increasing the lower end of the guidance range for revenue and adjusted EPS for the full year 2014."


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