Virbac Stock

Good afternoon, everybody. Good morning for those who are further. I'm really happy to welcome you for this half year results 2026. For those who doesn't know me, I'm Carole Manducher. I'm the Global Head of Communications for Virbac. And I'm here along Taron Hovhannissyan, the Investor Relations Director. And of course, on the floor today, we have Paul Martingell, our CEO; and we have Habib Ramdani, who is our CFO and Deputy CEO.

So I will leave the floor to Paul and Habib to introduce you with our half year results and the different perspectives we have. And after that, you will be able to ask your questions. But please do not hesitate to use the chat or the questions room to start to ask your questions so that we are ready to shoot when they are over. Thank you so much. Paul, the floor is yours.

Thank you, Carole. Good afternoon, good morning, everyone. Welcome to this call and pleasure, as always, to connect with you to take you through our half year 2026 results and to connect that as well back to some of the strategic updates that we shared early this year. Maybe just to share a few high-level messages myself, and then Habib will go deeper into some of the financials later on.

Very, very solid, and we're very happy with the first half performance. As you've seen, 7.4% growth, really driven by our Supercharge platforms that we shared with you in our Growing Together strategy that we announced earlier this year. Those platforms growing double digits. And also, as you see the second point, bringing a nice favorable margin mix to the business as well with operating profit at 18.8% for the first half and up 50 basis points versus prior year.

At the same time, as we delivered the strong and disciplined financial performance, we continue to invest strongly for our future growth and sustainable development, significant and strong continuing impact in R&D, in our CapEx investments to ensure that we have the capacity for growth, agility and great customer service going forward and also increasingly in A&P, advertising and promotional spend, given the ongoing shift towards an omnichannel business model and the amount of our business, which starts to become more direct-to-consumer in nature.

I mentioned earlier the industrial transformation, we will enter into a bit more detail there, but 3 or 4 key projects that you are well aware of. Happy to share that with the teams we put in place and some of the capabilities we've been building, those projects are being very well managed and executed and all on track and as planned.

During the first half, we've also, as a team, seen the ability of Virbac to be very agile in the face, of course, of some quite significant challenges, whether that's the inflationary pressures of oil from the Middle East crisis and of course, the changing nature of tariff discussions in the U.S., we've managed to offset that and continue to deliver margin expansion as planned in our Growing Together strategy.

Finally, in terms of another important piece of our strategy, as you know, external growth remains a top priority for Virbac. Delighted to say that the integration of Thyronorm brand that we acquired at the end of 2025 is absolutely seamlessly on track and performing even ahead of our initial expectations at this stage. So great mobilization from the team.

That again gives us the confidence to continue to search for those bolt-on acquisitions, small, medium size. And in fact, in the first half of this year, we've signed 2 smaller deals, but still interesting to share 2 licensing deals in areas of innovation in specialty segments that are a very, very nice fit with our Supercharge and core platforms. And in both cases, where not only do we have the initial right for distribution in the selected geographies, but we also have an option for full acquisition of those brands.

All that to say that the continued responsibility that you've always had with Virbac continues. And as you know, we -- the strong performance of the first half gives us the confidence to share that we are now targeting the upper end of our sales growth range for 2026 and again, a confirmed EBIT margin of around 17%.

If we move forward on the external perspective, which, in fact, for us is really the #1 measure of our performance, and you would have seen externally other competitors perhaps not seeing things quite so positively; we, a, see the market continue to be robust. Yes, we see a slowdown in companion in the U.S.

But as you know, Virbac, we have a very broad portfolio across both companion and farm and internationally. And therefore, when we look at our reference market, we still see a rather healthy market.

Yes, a slight slowdown. But more importantly, we continue to see that the Virbac teams, the pipeline and portfolio that we have is able to perform consistently above that market and again, another free continuous quarters where we've been growing and perhaps even accelerating the gap versus the market, showing that real customer closeness that we enjoy, and I would say, an increasing focus on execution in the market.

As you know, earlier this year, we did make a change to our executive committee structure to be operating now these three regions, really to ensure, again, closeness to our customers and the voice of the customer as part of our leadership team.

Europe, of course, still a very, very strong home and center of the Virbac business, still delivering very positive and strong growth. But clearly, the highlights in half 1 came in both the North America region with double-digit growth in the U.S., which, as you know, is an absolute priority for us to really build a significantly stronger position in that market, and it's another strong double-digit growth for the first 6 months of the year following 2 or 3 years before that as well of double-digit growth in the U.S.

And in international region, where, again, double-digit growth, particularly in India, very strong growth as well as in Latin America, more than offsetting some headwinds in the Pacific region, where we've made, again, some changes to our commercial organization setup and approach, and we start to see some more positive signals from that part of the world.

But again, the strong diversity of our business across segments and countries, and the agility of our teams, delighted that we can have that 7.4% growth for the first half, but well split and well spread across all major geographies.

A reminder of our strategy that we shared earlier this year. And of course, it's year 1 on that journey. So we have lots to do. You do see the very strong positive impact of the focus on those Supercharged platforms, both on top line and on gross margin. And on the next chart, I'll come on to that, just again, put a bit more flavor behind what we have in that part of our business.

Also shared again today two nice examples with the Porus One and Vetcare deals that we've shared in terms of our ability to be a partner of choice in terms of external collaboration and with a very active and ongoing BD organization and the omnichannel transformation that we continue to go through.

A lot of focus from the team in the first half and as will continue going forward on really executing with excellence, both on the commercial side and as well on the industrial side to make sure that we can offset all those other challenges and be even more efficient and effective.

Certainly a lot more to do there, but the team already demonstrating a real passion and improvements in those areas, driven as well by our investments in data and digital that provide us with a lot more tools and data to drive those decision-making.

On the next chart, you will see, again, as we shared in the previous strategy update, just a little bit more flavor around those supercharged platforms that are performing so strongly. Ear, a really nice example, a surprisingly common and frequent challenge for pet parents and our customers, the vets.

In fact, allergy and within that, ear is a strong piece of it, an extremely frequent cause of vet clinic visits by pet parents and a space where we have an increasingly strong portfolio and position across a number of very well-trusted brands such as Easotic, Epiotic and increasingly Cortotic, which is a very nice innovation growing very strongly as it is the first antibiotic-free treatment in that space at a time where antibiotic resistance, of course, is a key theme for our customers.

In mobility, a very strong platform with Movoflex performing very well as life expectancy and expectancy of pet parents for the quality of life for those animals only increases. Movoflex performing very well and more recently, URSOLYX in the U.S., a fantastically executed launch and also performing again ahead of expectations. So we continue to build our portfolio and expertise in that space.

And on farm animals, reacting to, of course, some of the important one health challenges of zoonotic diseases that we've seen, especially over the last couple of years.

And of course, the continuing need for prevention and quality protein sources, the team continues to be very well mobilized, and we have a very strong position there, particularly in injectable trace minerals, an increasingly understood and important area to support livestock health prevention at key moments for the farmers and customers on those journeys.

So we'll continue to provide more flavor and color on our Supercharge platforms, but again, growing around 12% in the first half of the year. So very, very solid performance.

Finally, I shared a little bit about that, and you would have seen it in our press releases two very nice complementary deals that we've been able to sign in the first half of the year, again, showing the agility and the very strong perception of Virbac as a potential partner of choice for companies that are developing such innovations.

Two distribution licensing agreements that give us for the geographies shared here from 2027, the distribution of these very interesting brands and innovation. We have a very strong fit in two areas of strength for Virbac.

But more importantly as well, in both cases, we have the option under certain conditions to close a full acquisition of those assets and bring them into the Virbac portfolio, something that we've done with a number of our assets in the past and something which is really, again, a core part of our business.

These are smaller scale transactions compared to something like Thyronorm that we shared at the end of last year. But that's not to say that our team is not extremely active and continuing to pursue other bolt-on acquisition opportunities as again, that remains a core and critical part of our growth model, complementing the strong organic growth that we always strive for.

With that, I pass over to Habib for a little bit more flavor and detail on some of the financial performance. And of course, we'll be here for Q&A later.

Thank you, Paul. Good morning, good afternoon, and good evening to all of you. It is my pleasure today to present to you our financial results, half year financial results at the end of June 2026. Let me start with the usual key takeaways from our financials.

As Paul shared, we have had a very solid top line development. We are reaching EUR 768 million at the end of June, which is a 7.4% growth at constant exchange rate and scope. I'm particularly pleased to note that it's a qualitative performance with a nice mix between volume and price. It's made of 5% volume increase, very dynamic and a disciplined 2% price increase.

It's also extremely qualitative from a geographical standpoint. I won't repeat what Paul has shared, but you've seen that our three regions have contributed significantly to the development of our sales.

Finally, we can note as well the contribution of Thyronorm to that results at the end of June. Thyronorm has added 1.4 points of growth during the semester. It's also particularly solid in terms of EBIT adjusted. We have ended the semester with EUR 144.2 million of EBIT margin, which is 18.8% as a ratio to revenue. And we have had a net result of EUR 87.1 million, which is a 6% increase versus the first semester 2025. And I will have the opportunity to go a bit more into the details in the presentation.

If we look at the other financial indicators, we have had a net cash flow generation very solid as well at around EUR 130 million during the first semester and CapEx spending, which has continued to increase in line with our expectation at EUR 57 million.

And as you can see, we ended the semester with a net debt reaching EUR 200 million, which is a slight increase versus end of December 2025, mainly due to the usual seasonality that we have every year. And as you will see later on, we continue to expect cash generation during the year 2026 of around EUR 80 million.

Before we move into the segments, let me take a few seconds to cover the exchange rate impact. As you can see, we have had some headwinds in terms of currency impact. We have had a negative impact on the top line by EUR 25 million and a negative impact on our bottom line, EBIT adjusted at around EUR 5 million.

However, the positive thing is that for this semester, the currency evolution have not triggered a change in our ratio of EBIT adjusted to revenue, which has remained stable at 18.8%. So no impact from the currency on our [ EBITA ] ratio. Contrary to last year, if you remember, we had a dilution of our ratio linked to the currency evolution.

I can also mention that we are seeing most recently a significantly less impact. Actually, for the month of August, we had nearly no impact of currency on our top line. So we cannot really -- we have no crystal ball. So it's difficult to anticipate the end of the year. But at least in August, we had a better situation.

So let me move now to the evolution of our net revenue by segment. And I'll start with the revenue split between companion animals and farm animals that has remained extremely stable, and we continue to have a very balanced portfolio with 60% of our revenue from companion animals and around 40% on farm animals.

If we continue to dive within the companion animals product ranges and we look at where the growth is coming from, from a segment standpoint, you can see that we have three main segments that have had a growth rate close to double digit or double digit, above double-digit growth rate. The first one is specialty with 23% increase.

Obviously, a portion of that is linked to the integration of Thyronorm, but we had some other Supercharge product or products from our Supercharge platform that have contributed quite significantly to that, including our mobility ranges with Movoflex and URSOLYX that Paul shared earlier.

Pet food has had a good semester as well, continue to have double-digit growth rate at close to 14%. Other segment with our dental Supercharge categories that is accounted there as well, you can see we are around 9% growth rate.

The only segment that is decreasing during that semester is parasiticides, which is quite aligned with what we have experienced last year regarding our portfolio of product. But as you can see, very much compensated by a very good dynamic in the other segments.

Let me move now to farm animals. We had a 10% growth overall in companion animal. We have also a very solid top line development, top line growth in farm animals with close to 7% at constant exchange rate and scope, so very solid.

Here as well, we have a few segments, three that are contributing quite nicely to the growth. The first being nutritionals with a 20% increase of our revenue there. Paul mentioned as well some of those Supercharge category with the ITMS. And obviously, this has been driven as well by the very, very good performance that we've had in India during that semester and in line with what we've experienced over the recent years with that country.

Vaccine has had a very strong semester as well, 8% growth. It's a mix of bloom Bluetongue vaccine in Europe and reproduction vaccine in other parts of the world, including Latin America. Other segment as well, you can see 17% with reproduction and anti-inflammatory as well products that have contributed quite nicely.

On the flip side, parasiticides has decreased, essentially linked to the situation in Australia, where we are suffering and we've experienced a decline of our sales during that semester. As you know, we've shared that earlier. And aquaculture as well with EUR 1 million less revenue essentially linked to one product for which we lost the distribution. But overall, again, a very solid performance on our two-leg, companion animal and farm animal.

Let me move now to the P&L statement to comment on our EBIT adjusted and net income. You see that our gross margin on material cost has increased as a percentage to revenue. So we've moved from 67.4% to 68.4%, which is driven by a favorable mix effect with the contribution of our Supercharge product, who tends to have a higher margin than the average of the group. We have the benefit of Thyronorm as well and also some base effect linked to some one-off that we had last year, if you remember.

If you look at now the combination of net expenses and depreciation and provisions, so all the other expenses within our P&L beyond the raw materials and consumables used, you will notice that the ratio to revenue of those expenses have increased by 0.5 point and the combination of positive point on gross margin on material cost and 0.5 point decrease enabled us on our EBIT adjusted before amortization and acquisition to increase by 0.5 point as well. So a very solid performance moving from 18.3% to 18.8%.

Let me comment a bit this increase of expenses as a ratio to revenue. It's made of essentially two elements. One of them is a positive impact linked to R&D spending, and you can see a bit of that in external expenses, which have increased by only 2%. So it's linked to a limited spending of R&D versus last semester, but it's essentially a phasing effect versus 2025. We expect that to normalize during 2026.

On operating expenses, before R&D, we have a bit of the same phasing effect as well. But the other way around, we have had incurred higher expenses in the first semester of 2026 versus the first semester of 2025. But here as well, this will normalize for the full year 2026.

And finally, I can mention as well some one-off expenses that we had during that semester that plays a role as well to explain the 1.3 point increase of our operating expense as a ratio to revenue. But this as well, obviously, will -- as a ratio to revenue will decrease when we will consider the full year.

So all in all, we are, again, reaching 19%. And the dynamic of this first semester with what we anticipate for the remainder of the year makes us very comfortable and very positive in our ability to reach the guidance that we have confirmed on EBIT adjusted, which is 17% as a ratio to revenue for the entire year.

Let me move now down to the rest of the P&L. You see that the depreciation of intangible assets arising from acquisitions have increased. When comparing first semester last year and first semester 2026, it has nearly doubled. And this is essentially linked to the integration of the depreciation of the assets linked to the acquisition of Thyronorm.

We have recorded a bit more than EUR 5 million of other nonrecurring income and expenses in the first semester 2026. We had nothing last year. So this EUR 5.6 million is essentially linked to two elements.

The first one is depreciation of stock and equipment linked to the commercialization stop of one of our products. And the second is linked to damages that we have suffered in one of our -- within one of our wholesaler. So we have recorded the damages, but we are working with our insurance to get it covered.

Two final comments on the rest of the P&L. The first one on financial income and expenses. You see that we've improved there, moving from EUR 8.5 million expenses to EUR 3.2 million. This is essentially linked to the impact of exchange rate.

We had last year some negative impact linked to the evolution of the CLP, which is the Chilean currency, which impacted our semester, whereas this year, we have had a more stable CLP when comparing the end of year -- end of December 2025 versus end of June 2026 situation.

Income tax has remained quite stable versus last year. The evolution is aligned with the activity of the group. And all of that, when combined, enable us to record an increasing net income moving from EUR 82 million to EUR 87 million.

Let me move now to the free cash flow. You see that it stands at minus EUR 7 million in H1 2026. It's an improved situation versus last year. And it's also very much aligned with what we expected for that first semester.

The two main elements explaining the -- our net free cash flow is obviously the CapEx spending. You see we have spent EUR 57 million during the first semester. It's slightly above what we expensed last year. And it's linked to the industrial -- most of it is linked to the industrial project transformation ongoing with the 3 to 4 key projects that Paul mentioned earlier.

The working capital, we have had a requirement of EUR 80 million. Here, you probably remember that we have usually a seasonality effect with requirements during the first part of the year on working capital, especially linked to our commercial model and the end of year rebate that are being paid during the first part of the year and the combination of CapEx and working capital requirement more or less equal our generation of net cash flow, which has increased, by the way, by around 30% versus last year.

So when you put all of that together, it explains the evolution of our net debt situation. You see that we ended the year last year 2025 at around EUR 173 million. We have slightly increased our net debt at the end of June at EUR 196 million.

Two comments there. The first one, again, it's very much aligned with what we expected and the seasonality effects that we usually see during our first semester. And second comment, as you can see on the bottom text, we continue to have a very favorable balance sheet situation and leverage with a net debt on EBITDA ratio, which stands at 0.6 at the end of June 2026.

I'll move very briefly on the consolidated balance sheet. You see the evolution of our working capital between December and June, but again, linked to the seasonality. And you see the nice ratio that we have, net debt on net cash flow and net debt on operating cash flow, slightly increasing, but again, essentially linked to the seasonality.

Let me say a few words on our shareholding structure. It's going to be very brief. We continue to have our majority ownership, the Dick Family having slightly more than 50% of the shares and 66% -- slightly more than 66% of the voting rights. So very much stable versus last year situation, no changes there.

And before moving to the Q&A session, I'd like to wrap up sharing with you our full year guidance 2026, which has remained the same versus what has been shared in July.

We continue to target the upper end of the net revenue growth original target that we shared at the beginning of the year, 5.5% to 7.5% at constant rates and scope. Our EBITDA margin, EBIT adjusted margin is expected still around 17% for the full year 2026. We'll spend EUR 125 million -- around EUR 125 million of CapEx for the year, and all of that will enable us to generate around EUR 80 million of cash at constant rates and scope again for 2026.

Thank you very much, Paul and Habib. I suggest we move to the question. And Taron, you will lead the way through the different question.

Yes. Actually, we can directly start with -- continue with the guidance. One of the questions is, could you please explain why you're expecting EBIT margin of 17% versus 18.8% in the first half year?

Yes. So I'm commenting very often on that, and we have every year a bit of the same seasonality. We tend to have a higher EBIT adjusted margin during the first part of the year compared to the full year. So it has been the same.

If you look at our historical publication for the past 5 years, it's between 2 to 4 points different depending on the year and the phasing of some investment. We are more on the lower side of it. So we have a more balanced situation this year versus some of the earlier year, but it's a classical seasonality that we see. And a part of it is linked to the budget cycle and the fact that we have a bit of some delays at the very beginning of the year.

Next question is on the depreciation and provisions. The person has seen that our depreciations and provisions have decreased in the first half compared to the last year. And the question is also when are the CapEx that we are investing in -- will hit the DAP in the coming years or after?

Yes. So it's true that we have had a slight decrease, but it's an artifact actually. We've had some product that have been provisioned in the past that we have scrapped. So when you do that, we have taken back the provision. So that's why you see the decrease.

But at the same time, the line just above, which is other expenses, you'll see that you have the reverse effect there. So it's -- the net effect of that is zero, but you have a plus in one line and a minus in the other line, which gives the impression that the depreciation is decreasing.

Without that element, which accounts for around EUR 3.5 million, you'll see that the depreciation is increasing, actually slightly increasing. The majority of the big project transformation project that we have shared have not already kicked in because we had no go-live for them.

So we will see the impact of those projects in the depreciation in the later years when we will have the go-live for those projects. But obviously, we also expect some positive impact that will compensate in terms of productivity that will compensate part of those amortization.

Next question is on Porus One and Vetcare. Could you please quantify the revenues that we expect from these two products?

[indiscernible] the question, and we don't disclose all the details. But just to say these are clearly not the same scale as Thyronorm, where we would give more flavor. These are really typical bolt-on commercial deals, but I think we could say in the range of low double-digit million, just to add a little bit of flavor.

More importantly, they are growth and margin accretive from year 1. And in fact, once -- or if the acquisition will be triggered, would be even further margin enhancing because we would, of course, cut out the royalties at that point. But yes, from '27 growth and margin enhancing for Virbac Group.

Staying into the M&A. The next question is about North America. This is a focus area for us. And the person wants to know if this is still -- we are still looking there. Are there targets there? And what kind of targets are we looking in products, technology, industrial capacity?

I can say we -- as we said, we continue to be extremely active on the M&A side. I think important to share that we don't see any slowdown in terms of opportunities being on the table. Our team is consistently mobilized and very active. We've built a very strong capability in M&A and licensing as a core part of our strategy over the last years.

So you can trust us that we continue to look and be, of course, both on one side, strategic and looking for the right deals, including U.S. as a focus. And yes, of course, we would like to add significantly more scale in the U.S. So that's absolutely priority #1 in terms of focus for the M&A team.

But of course, we also remain agile to be able to be ready for what's available. And of course, you know that we have to adapt to both. So we are both very active. We'll continue to be disciplined, but plenty of ongoing conversations happening.

Great. Next question is about energy prices in the context of the international crisis. Can you please elaborate on this topic?

Yes. It's obviously a topic, the evolution more generally of the inflation on some of the components, raw materials and product that we are buying, including energy, obviously. We don't -- we are managing that very actively. We have hedged in some of our countries, including France, where we have a good portion of our energy consumption.

So we are not really exposed for the next 2 years, neither on electricity nor on gas with a fixed price that have been set up. And we are actively managing through negotiation. And we've shared that we don't expect any material impact in 2026 from the inflation, including inflation on energy.

Another question, more financial question is about inventory and working cap. Do we expect to go in the next years to go back to the normal levels of inventory and working capital?

Yes. So on inventory, what we've shared is that after the COVID and the start of the Ukrainian war, we had an increase of our inventory. We wanted to make sure that we would have everything required to serve the demand and our customers. So we have increased where it was necessary and required our inventory.

Since then, we've worked to optimize and we've seen a decrease of our inventory as a ratio to revenue. We reached a very high point 2.5 years ago. And since then, it has decreased. We will continue to optimize wherever we can. We can have on specific moment, some one-off increase.

For instance, in one of our projects, we are transferring the production from one site to the other. When you are doing that, obviously, you want to make sure that you won't run into a shortage, so you can increase temporarily your inventory.

So we can have slight up and down linked to that. But the trajectory shall continue to decrease. It will not be a material decrease over the coming years, but more of an optimization wherever we can.

Coming back to more M&A-related questions about Thyronorm, can you give us a little bit more flavor on the market shares that we have for this product? And what would be the future catalysts or anything on sale, commercial and marketing that we can use and supply?

Well, first of all, happy to say that integration has gone extremely smoothly, both from a brand business team point of view. And as you have seen from a few of the numbers shared today, running a little bit ahead of our earlier expectations.

If you remember, something quite unique about the Thyronorm deal is that it's actually a phased deal to a certain extent. So we will have more geographies entering into the direct Virbac ownership and management over the years to come, including the majority of Europe happening now in 2027. So the -- let's say, the rollout and the impact of Thyronorm is not a one-off. It's something that will happen over some years.

And yes, in '27, the big piece to come is Europe. At the same time, now given that asset is in our hands, we continue to invest, of course, in the science, in the post-launch studies and the brand building necessary to continue to develop that asset as a core part of our portfolio. So that's definitely an asset that we believe has further runway for growth and also, again, the complementarity with other parts of our portfolio, giving also further benefits there.

So still staying with M&A., the question would be around what metrics are we looking at when we are evaluating an M&A deal? And what we are using for the valuation, EBITDA multiples -- EBIT adjusted multiples for larger deals? And what else we use for smaller deals?

Yes. So it's a combination of different elements. We are doing the classical NPV, obviously, analysis. We are looking at the return on investment. And very important for us is the impact on the rest of the group. We see from a qualitative standpoint, making sure that it contributes nicely to product country, but also that it has a positive relative impact on the bottom line and the top line, those are the preferred deal; and synergies creation as well on the top line, the rest of the portfolio when you have positive synergies on product ranges and also on cost synergies, which are included in our model.

Next question is around CapEx. Can you come back to our industrial roadmap of CapEx?

Yes. So we stated that we have a very intense industrial transformation ongoing with a few significant CapEx investment project to prepare the future, to create more capacity, to renovate some of the sites that we have as well to internalize some production that are on strategic products for us, ranges such as the pet food. So this is what is driving our industrial transformation.

It will enable us also to increase our productivity while we are doing that, obviously. We've stated that we expect to be above EUR 100 million for a few years. And going further than that, obviously, it's quite difficult. We don't necessarily have all the visibility, right? It's a very significant transformation that is ongoing.

So again, on CapEx, what would be ongoing -- after the ongoing acceleration, what would be a good ratio of CapEx to revenues in the 2 or 3 years after this acceleration?

I just mentioned that it's quite difficult to anticipate. We -- we shall see a decrease as a ratio to revenue as the top line is going to increase, and we'll have some of those big projects that will be behind us. But again, what we know is that we'll have a few years above EUR 100 million. For the rest, it's too early to mention.

I can, though, say that cash generation is very important for us. We are very, very focused on generating cash. We want to continue to be able to activate external growth. And we know that it goes through a very healthy and solid cash generation.

Question on one-off costs. Could you explain what is composed of in the H1, the one-off cost that we had? And is it related to litigation settlements, product discontinuation, et cetera?

Yes. So it's essentially product discontinuation. When you streamline your portfolio for some products, we had a few small product discontinuation, which triggered some expenses, one-off and also some litigation settlements. So when you have a few million euros like that in a given semester, it's a bit visible. It's 0.3, 0.4 points of profitability impact for this semester of those one-off expenses.

Question on the Supercharge portfolio. Do the Supercharge portfolio follow the same seasonality as other products at?

Overall, we can say it's still a relatively broad piece of our business, right? It's 8 Supercharge platforms, which go across both companion and farm; some very nonseasonal such as mobility, dental; some, of course, with farm animals can be a little bit more seasonal. But no, overall, no major seasonal impact on Supercharge platforms. It's something that should be relatively constant.

Great. Two questions that go together. What would be major product launches next year? And what can you speak about, tell about more about R&D pipeline?

Product launches, we cannot really comment. It's too early. We'll do that when we comment about 2027.

Next question is about the potential fertility campaign in Australia. Maybe we need some more -- I think it was Delphine. Maybe Delphine, you can give more feedback or add more details to this question. I'll go to the next question. To reach full-year margin guidance, you need to improve H1 margins by 150 basis points versus 50 basis points in H1. Please explain the building blocks behind it.

Yes. It's essentially phasing of spending that will enable us to reach the 17% for the full year. As I mentioned, the first semester has been impacted by some one-off. We don't expect that during the second semester. So if you compare like-for-like, we are above 0.5. But it's essentially a phasing of our spending between H1 and H2.

I believe that was the last question that we had. Another one just came in. Is share buyback something you are considering right now given the valuation of the stock?

No. We really consider that the priority for us is making sure that we have the mean to continue to consider external growth. So we are really favoring external growth to other type of capital allocation such as share buyback.

[ Laurent ] is asking the impact on H1 EBIT margin.

Yes, we have not gone into that detail. We expect 0.5 point for the full year. It's probably around that, maybe -- yes, probably around that for the first semester, but we have not gone into that detail.

Why is the phasing of OpEx different this year?

I mean it's different every year. It's linked to the type of projects that we are considering implementing the time at when you implement them. On R&D, it depends on the phasing of your clinical studies and when you recruit some of the animals. And so it's quite natural to have that, and we are seeing that every year.

I see [ Frederic ] is starting maybe...

Just to take advantage of the comment on the phasing of the OpEx, just to again remind as well, we are thinking mid-, long term in sort of sustainable growth. We could hold things back in the second half if we wanted to keep the profit number where it is, but we want to continue to invest in the second half of the year to make sure we as well go into '27 and beyond, of course, with strong momentum. So it's also about our approach to consistently investing for the long term.

Maybe last question. Depending on how many deals are available and their size, where would you be comfortable having leverage?

Yes. We've stated in the past up to 2, absolutely no problem. We would definitely go there. We can even go above that, 2.5. Going above 3 will require a very solid -- we cannot exclude it, obviously, if we have a very strategic deal that makes a lot of sense and where we are confident that we can deleverage then with the right pace, we could consider. But definitely around 2, we would be very, very comfortable.

Great. That was the last question. Please feel free to reach out if you have any further questions.

Thank you, everyone. Thank you very much.

Thank you.

Thank you very much.

Good afternoon to all, and welcome to Virbac 2026 Annual Results Webcast. We are pleased to have you here and online, of course. Today's call is hosted by our CEO, Paul Martingell; and Habib Ramdani, our CFO and Deputy CEO.

Before we begin, I remind you that the slides and additional financial materials presented are available online on the Investors section of our corporate website. The replay of the meeting will also be available at the conclusion of the meeting. [Operator Instructions] It is now my pleasure to turn the floor to Paul and Habib.

Thank you, Carol. Good afternoon, everybody. [Foreign Language] Pleasure to be here with you today for my first Virbac full year results announcement. And perhaps in that spirit, I'd just share a couple of messages of my first 6 months in the company.

I think 3 things that really stand out for me. One, just an incredible journey of learning, so spending as much time as I can over the last 6 months across our affiliates across the world. As you know, Virbac is an incredibly international organization today, proudly French, but incredibly international. Spending as much time as possible really on the field, on the factory floor, out visiting the vets, the customers from across the world, and really just trying to listen and learn as much as possible, to be able to be here today as well to share some first thoughts on our strategy going forward.

Second point for me really that struck me in the last 6 months is just how incredibly important animals are in our life. And to me, it's been really quite striking, quite -- incredibly powerful, very moving just to listen and hear those stories every single day, whether it be from pet parents across the world, from farmers, from vets and even from our own employees who are so, so passionate about this space.

And I'm absolutely convinced from everything that I see and listened to every day over the last 6 months that while animals -- that animals have never played such an important part in our life, both as part of our family, but also society, nutrition systems, quality protein sources for the future and the broader One Health initiatives.

The third and final piece of my learning over the last 6 months has really been truly to discover the fantastic company and, more importantly, the incredible people that we have at Virbac. Many of you know the company probably much better than me still, but this really is an incredible company, a wonderful culture. We have people that I'm proud to work with every day because they are so, so passionate about animal health. And we have this incredible track record now of almost 60 years. And of course, it's an absolute privilege for me to join the team and for us to try to continue that journey, advancing the health of animals with those that care for them.

So today, with Habib, I'll just take you through a couple of headlines from 2025 and a first look at a slightly refreshed strategic direction going forward. And then I'll hand over to Habib for the more detailed financial section, and we'll, of course, take your Q&A.

Quite a busy chart, but we try to just sum up a little bit everything that's happened across the wonderful world of Virbac in 2025. And it's really been a strong and solid year with significant and important progress. And to highlight that beyond the basic numbers, I think 3 things to really call out.

First of all, this is a company, and we will continue that, that is a company based on strong performance culture and very, very strong financial discipline. And you've seen the numbers published today. You've also seen our guidance for 2026. So a strong commitment to continue that sort of strong financial performance. At the same time, and this is what I'm extremely proud to see coming out of 2025, while delivering outperformance, a record year of investment across many key areas in Virbac, a record year of investment in terms of our R&D, which, of course, is really the lifeblood of our future in terms of innovation and making a real difference for animal health, a record high year in terms of CapEx investment for the continued modernization, agility, customer service and quality that we strive for every day.

And another very, very important year in terms of our business development and licensing efforts. We call out specifically in 1 year now 2025, 9 deals that we signed specifically on different technology, assets to bring into our R&D pipeline and capabilities.

On top of that, during 2025, at the end of 2025, we executed again on our M&A strategy. You know this has been an important part of the history of Virbac. We'll come back to that again. It will continue to be so. I'll talk specifically about the acquisition we made a little bit later but we're delighted to be able to close '25 with a successful acquisition. It's of course not really impacting the numbers in '25. So that's fully coming in, in 2026 and beyond. So a strong year across the business, both delivering performance, but also the transformation for the future.

What I do want to call out and give a little bit of context to, because we know that the animal health industry has been rather healthy and positive, so is our strong performance simply us riding a wave? No. The teams across Virbac, driven by that sense of both purpose and performance, we are always looking to outperform the market. That's been our history, and that will continue to be our guidance, as you'll see.

You see here the red line is the market growth. The blue line is Virbac growth quarter-on-quarter. And you can see that, over the last 5 years, we've got a very, very strong track record of being able to outperform the wider animal health market. And that again is strongly linked, of course, to our teams, to our innovation, to our M&A, but also our broad portfolio across species, across animals and across countries.

You see as well at the bottom, because the market doesn't cover all segments at times, especially on petfood, but just a reminder that it's not a one-off in terms of 2025 growth. Last 5-year CAGR, over 8%, so really impressive track performance.

Now following those 6 months and working with the team across Virbac, what we're definitely very excited to be able to share today is a little look at what we would call our refresh strategy. As you've seen and heard, there's lots of things that are working really well across Virbac. So I'm certainly not here to create any sort of revolution. But of course, the world outside changes, the expectations of pet owners, farmers, vets and our customers continue to change. The competition, of course, is there. And therefore, we continue to evolve.

And so we've put together a strategy towards 2030, while at the same time we continue some of those bigger investments in R&D, CapEx and other M&A, which will, of course, take us even further beyond 2030. But to give a slightly more short, medium-term horizon for you and for our teams, we want to be laser-focused on delivering through 2030.

We call it Growing Together because it's very much the spirit of Virbac, growing together with our partners, with the vets, with the customers, but also ourselves across our teams within Virbac, and also growing all of us as leaders. And it's really focused on 4 pillars. And of course, we'll have time for Q&A, so we can go deeper on this, but just to give a couple of headlines.

First of all, while we do have a very broad portfolio, which brings many advantages within it, I'm really excited to see that we have some absolutely fantastic science, some real jewels in our portfolio and some positions of real strength, which have perhaps not always been fully exposed and fully understood.

So we put together a portfolio view, and we've come out with a group of products and platforms that we call now Supercharge platforms. These particular products and platforms will contribute a significant amount of our growth over the next 5 years to 2030. These are also products and platforms where we believe we have real superior product differentiation, science, and also we have, in general, margins that are ahead of the company average, so we can also continue that positive cycle of being able to reinvest in our business.

Pillar number two is really focused around innovation. So no big surprise there. Again, the lifeblood of what we do. The one thing that I would stress and that we will talk about more, I'm sure, is while R&D, our internal R&D, of course, is important and, as you saw, continues to be strongly funded, we believe strongly that our role as well is to be a fantastic partner. There's so much happening in the world of science across biotech, start-ups, universities, small companies, local regional players, and we want to be the company that those types of people that are working on incredible breakthrough science for animal health, will come to and want to work with. And we believe we can be that because, on one hand, we have a global footprint. We're present everywhere. At the same time, we're still small enough and with a culture of intimacy and care. And if you come to us to work on your product or platform that you've been working on, sometimes for many, many years, you know you get people that will really care to take this forward hand-in-hand with you in the future.

At the same time, Virbac has been strongly focused, of course, we were created by a vet for vets. And while vets will continue to play an absolutely fundamental role, of course, across animal health, we know that the world changes. We know that in many countries, in many therapeutic areas, much of the repurchase happens now online. And therefore, for us to evolve from being almost vet-exclusive to being really vet-endorsed, so we definitely want the vets to be promoting and speaking positively about our products and about our company because they trust us, because we have quality innovations and great-quality products, it should be vet-endorsed, not necessarily just vet-exclusive.

The third pillar, all around just executing with excellence, a real focus from all of us in the organization, of course, supported by the ongoing transformation that we have in our digital data and AI, that allows us with the very complex industry across the thousands of vet clinics and hundreds and thousands of products to be even more precise, targeted and free up time for better work on those innovations.

And the fourth pillar, which again has been part of our Virbac model in terms of ensuring sustainable profitable growth, but if we want to continue to do all the great things we're doing in terms of innovation in R&D, CapEx and M&A, then, of course, we need to make sure that we can sustainably fund that. And so we kick off our Fund our Growth program really focused around productivity improvements, our industrial footprint as we were -- as we've been built from so many acquisitions, of course, purchasing, but also smart simplification and some newer areas like revenue growth management where the more we find ourselves dealing with bigger customers, chains, online platforms, the ability to smartly manage pricing discounts across those different channels becomes ever more important.

So that's our framework for our Growing Together strategy to 2030. I just -- and I won't present everything, but just to call out a couple of the examples because I guess the growth platforms and the growth drivers is something that you'll be very interested in. Perhaps just to give you a little bit of a flavor in that area, to pick out one example, the space of reproduction.

If you look today, less than 1% of all neutering of animals is done in a nonsurgical way. Surgery has been done for decades. At the same time, there's more and more science that demonstrates that has -- of course, it's a perfectly acceptable option, but it does have other consequences. It has behavior change. As more and more younger generation, Gen Z and beyond now, start to be pet parents, they perhaps have different attitudes towards neutering and surgical castration. And we are one of the few companies that offers a nonsurgical alternative to that. But again, less than 1% of those procedures today are happening in a nonsurgical way. So amazing opportunity for us to continue our work to educate, to bring the science to explain, to help change those behaviors, both of the vet and the pet owners.

So just one example of where we believe that it's not just about the existing market growth, but there's a big opportunity still to really drive penetration of our products and what we do. And the platforms that we're sharing here, each one of those has that type of opportunity for us still to go much, much further.

Again, we've talked a little bit already or highlighted that for us, R&D is absolutely at the heart of what we do. Important perhaps just to share a few numbers and give you a flavor of our focus in terms of R&D, but we do have a considerable organization. You saw the investment in euros that we talked about earlier. Almost 800 people across R&D, regulatory affairs, some of the connected areas there. So this is a significant organization across 6 R&D centers worldwide.

And you can see here a few highlights. We have an extensive pipeline. So around 200 projects in total. Of those, we have 40 what we call priority projects. These are the ones that get absolute priority on our resources, our funding. Of course, very important to note that the peak sales potential as normal of that type of pipeline, is not risk-adjusted. It's, of course, absolutely part of what we do when you're talking about breakthrough science, that some of that will not come through. But I think it's important to give you a flavor that we're not working on just small things. There's a considerable pipeline. And you get a little bit of flavor here as well of the priority focus areas in terms of some of the species and segments that we look at.

And just to bring that to life, at least in 2025, proud to share a number of the innovations that we brought to life in 2025. So we're not a company that's doing just 1 or 2 things per year, given our strong geographical footprint and the fact that we're operating in both companion and farm and across many species. You can see in 2025, it's been another busy year, and very positively busy year in terms of innovation and really meaningful launches.

Vikaly, for those here in France or with more connection to France, was an award-winning innovation, award-winning from the vet, which is the most important. Vikaly is the first ever medicated petfood in the world, around 15 years of work behind that one. We've proven benefits that the medicated petfood is actually giving a better result than just giving the medicine and a separate petfood. So really making the life of the pet and the pet owner simpler and with better results, exactly the type of innovation that we strive for. Again, I won't present all of them. You've taken a look, and happy to take questions on any of this later.

I do want to take a moment, because it was only in December, so still relatively fresh, that we announced the acquisition of Thyronorm. The reason we call it out specifically, it's not new that we do M&A. We've been doing it, as you know, across our history. But for me, coming in, this was one that I was particularly excited about, and I would say almost a sort of perfect model of what we would look at when we think about M&A in Virbac.

Why do I say that? First of all, it always starts with the unmet need. So for any pet parents of cats out there, then I'm sure you will know and understand that trying to give a cat with a chronic condition a daily medicine, and especially, a daily pill is particularly painful and not at all the type of moment of connection that you want to have with your animal every single day.

What we loved about Thyronorm is this is a fantastic alternative to that current treatment. It's a much, much preferred format. Fantastic flavor. We've had incredible videos of pet parents sharing how what was once a painful moment of trying to force a pill into the mouth of the cat is now actually a moment of embracing the cat because the cat's literally jumping on their lap wanting to take their medicine because it's been so well prepared.

Fantastic fit with our existing portfolio in Virbac and our priority countries, so especially Europe and U.S.A. And we know that the cat population is growing today faster than the dog population. We see more and more of this trend with younger people in a city living. And therefore, as the cat population increases and the life expectancy is also increasing, then these types of chronic conditions become 10 -- up to 10 years of a cat's life requiring this type of treatment. And we have a fantastic solution for them in that space.

We, of course, also believe that compared to the previous developer and owner, the Virbac strength and power in market in terms of our sales force, our reach, our relationship with the vets and customers will also be significantly stronger than the company that developed it, and therefore, we'll be able to bring this to many, many more animals and pet parents. So really, we think, a fantastic acquisition that will be both growth and margin accretive from 2026 and beyond. And again, a good template of what we'll look to continue to do in the future.

Before we jump into the more detailed financial pieces, of course, always important, and this is really at the heart of Virbac: our employees. This is not just a chart and words on a page. This is really something that I've again seen from day 1. There is that deep-rooted passion for what we do, both for the animals, but for the broader society. And we have a very, very clear road map that's been laid out, that's been just approved as well by our Board, strong ambitious road map across these 4 pillars. And we'll continue to bring more news and more updates on that. But very, very proud of what the team is doing there.

We've made and we saw some updates very recently, significant improvements on our carbon footprint. That's another reason as well for our CapEx investments, of course, both the quantity of supply, the capacity, the agility, but also doing it every time in a cleaner way. And I'm also very proud having joined to see the incredible work we do to every time reduce any need, or to the very, very minimum, animal testing in what we do.

To wrap up from me and to sort of bring that into a very simple synthesis, on one hand, of course, the world changes, and I'm new, and we'll try to evolve and continue that Virbac magic. But a lot of the same discipline that you've been used to will continue. And I think just important to sum up and give you a bit of a picture that Growing Together strategy is really framed around these 4 pieces.

Our number one target, it always starts for us with the desire, the expectation, the challenge to our teams to be able to consistently outperform the market. Number two, we continue to believe that an important part of our model is that programmatic or bolt-on M&A. So the example of Thyronorm, not necessarily big transformational M&A that would distract the teams and be too internally focused, but things that we believe that when you bring them into the Virbac with our strength, we can make them bigger and stronger relatively quickly.

We remain committed to the 20% EBIT margin that we've communicated in 2030. So that's an integral part of our 2030 strategy. And we continue to have a laser focus on cash. We remain extremely low debt. And that's, of course, what allows us to continue that investment in R&D, CapEx and M&A.

So some change and plenty of things that continue in the same vein. And with that, I have the pleasure to hand over to Habib to take you through the numbers in a bit more detail.

Thank you, Paul. And good morning, good afternoon to those of you that are with us in the room, and good evening to some others. It's my pleasure to take you through our 2025 financial results, at least the key elements. And let's start with some of the key takeaways of what we have achieved in 2025.

Paul mentioned it, a very solid year in terms of top line growth with an organic growth of 7.9%, constant rate, constant scope. It's been done through a significant 5% volume growth and 3% price. We have had a 16% margin, and which is a 16.3% EBIT adjusted margin at constant rates and scope, perfectly in line with what we have guided for the year, around 16%.

We have suffered, and we'll come to that, from some strong FX impact. Also some temporary industrial challenges. I will come back to that in the later slides. But all of that has been partially offset by some strong discipline in the management of our costs, which enabled us to have that stable EBIT adjusted in 2025, which shows the resilience of the group.

The net result had growth by 3.2% versus 2024. And what is very notable this year is a stable level of debt despite the record investment that we made in several areas, as Paul mentioned: R&D, CapEx as well as the Thyronorm investment, the acquisition that we did. We've been able to maintain a stable level of debt, at a very low level as well. I'll come back to that again in the detail slides.

So let's start now by going more into the details of the top line growth. You see it's been a broad-based geographical growth. All of the regions have contributed to the growth, even the Pacific, which has suffered during the first semester of 2025, we've seen a rebound during the second part of the year. North America has been leading the way with close to 15% growth, nearing EUR 200 million of revenue in 2025. You see as well Europe and Latin America with more than 7% growth. A very solid performance on the back of both farm animal and companion animals, with most of the Supercharge categories that are contributing significantly to the growth of those 2 regions. And a final comment, on India, within the India, Middle East and Africa region, India has had another very strong year with more than 8% growth during 2025.

We've suffered some headwinds in terms of FX rate, which you see on the slide, minus EUR 50 million on the top line, minus EUR 16 million on the bottom line. And it has also impacted our profit as a ratio by 0.5 point overall. And you see the majority is coming from 3 regions: Latin America, IMEA and North America, that concentrate the majority of the downside in terms of FX impact.

I will go very quickly on that slide. The revenue split between companion animal and farm animals has not substantially changed. We are at 59% (sic) [ 58.8% ] companion animal, as you can see on the slide, and close to 40% in farm animals. Both segments have grown during 2025, an extremely dynamic 11% growth on companion animals and 7% growth on farm animals.

Let's go a little bit more into the details of the segment, the contribution of all of the segments, starting with companion animals. What stands out is 3 main pillars that have driven the growth in 2025. petfood, 19% (sic) [ 18.7% ] growth. We continue to have a very -- an extremely dynamic growth. A portion of that has been done through the acquisition of Mopsan in Turkey, who has a very strong petfood business. But even outside of that acquisition, we have had an extremely solid double-digit growth on petfood, which continues in many markets to grow and take shares.

Second one is specialty. You've seen some of the launches that we've made. Part of these categories is one of the supercharge with the endocrinology and the contribution of one of the recently launched products, Suprelorin as well, [ reproduction ], has contributed there to the 17% (sic) [ 16.7% ] growth that we've seen on that category.

And the third pillar, with very impressive growth, is the other segment. You see the 16% (sic) [ 15.9% ] growth. And within that segment, we have one of the Supercharge category, the dental, that has continued to perform extremely well across the board, across the geographies, but with a notable very strong performance in the U.S.

A part of that, we've been more or less stable in 2 categories, on vaccines and parasiticides. You remember that we had a record year in vaccine in 2024. So we have had a stable performance in 2025. And to finish on that slide, antibiotics and dermatology, we have a strong segment in otics. Here with the recently launched product, Cortotic, that has again contributed to the growth of that segment in many geographies.

Let's move now to farm animals. A bit of the same picture. We have some pillars that have contributed significantly to the growth. You see the vaccines, 13%. We have had a dynamic performance in Latin America with our range of ruminant vaccines. As well as in Europe, we've been able to respond to the blue tongue virus quite effectively with one of our products that have enjoyed a nice growth, and that was a good answer to that epidemic.

Nutritional has had a solid double-digit growth. The demand is increasing here. It's a preventive treatment. We have had a very solid performance in many geographies, and notably in India, with a very strong growth in that country. We can mention as well the antibiotics, parasiticides. All of them have had a growth in 2025.

The only segment that have suffered is the aquaculture segment, as you can see on the slide, minus 5% (sic) [ minus 4.6% ]. And this is linked to the intense competitive pressure that we have, notably in Chile surrounding the parasiticides and our vaccines range, but not different from what we expected when we enter 2025.

So overall, again, a very solid performance, 7%. It's also a good testimony to the diversity of our portfolio where we are able to compensate for some of the challenges that we may have every year by some strong dynamics in many other segments.

So we've covered the top line, let's move now to the profit and loss statement. It's also here a strong testimony to the resilience of our business. I mentioned the 16% EBIT adjusted, perfectly in line with our guidance. We are moving from 16.6% in 2024. The majority of that decrease is linked to the FX impact, which we've suffered in 2025. At constant rates, the level of profitability has been quite stable versus last year.

And if we go a little bit more into the details, we had some headwinds that we had to manage during the year. One of them was linked to the temporary shutdown for maintenance of one of our antigen production sites. It lasted longer than what we originally expected. And as such, we have not been able to absorb all of the fixed costs that we were supposed to absorb in 2025, and it hit us quite significantly, around 0.5 point in 2025. Again, a temporary impact.

We've had also higher inventory write-off in 2025 versus what we had in 2024. But some of that has been offset by improved operating expenses during -- in terms of ratio to revenue during 2025 and the operational discipline that we have throughout the group.

A final comment on the EBIT adjusted is on R&D. We have had a more or less stable ratio of R&D investment as a ratio to revenue at around 8%. And Paul mentioned that in absolute value, we had a record investment year in terms of R&D at EUR 115 million.

Let's continue to go down the profit and loss statement. You see the other nonrecurring income and expenses that have gone from EUR 10 million to slightly more than EUR 3 million. You remember last year, we had the one-off expenses linked to the Sasaeah, the Japanese acquisition. This year, we have recorded essentially 2 elements. One of them is the one-off expenses linked to the Thyronorm acquisition that has been mentioned. And the second one is linked to the depreciation of inventory and equipment associated with the decision to stop one of our R&D projects, for slightly more than EUR 2 million.

So overall, our EBIT has remained stable in terms of ratio to revenue. Our net income, as you can see, has slightly improved, which is a consequence of a slight improvement in financial income and expenses moving from EUR 9 million to EUR 8.6 million and a slight increase in our income tax expense.

And I wanted to conclude on that slide by saying a few words on the effective tax rate. Our effective tax rate has slightly increased in 2025 versus 2024, moving from 25.5% to 26.5%. And this is essentially linked to a country mix effect.

Let's move now to the cash situation. You see that our net free cash flow has -- stands at EUR 81.4 million, slightly down versus last year. Essentially, this decrease is essentially linked to 2 effects. One of them is the CapEx. We have had a record year of investment in CapEx to prepare the future of Virbac. And the second one is linked to the FX impact that has been higher than what we had last year. But the operating cash flow has remained quite dynamic, even increasing versus last year.

So all in all, when you add to that the M&A acquisition spending that we did for Thyronorm at slightly more than EUR 100 million, we have been able to maintain a stable level of debt -- low level of debt, I shall say, since you can see on the slide, our net debt on EBITDA ratio is below 1, around 0.5, which gives us plenty of room for any future -- potential future acquisition in the coming months or years.

Very quickly, some comments on our balance sheet. I wanted to call out one element, which is our working capital situation. You see on the slide in light blue, we have improved in 2025 our working capital situation. The ratio has improved by around 3 points, which is quite significant, essentially linked to the evolution of our inventory. You remember that after some of the supply chain crises that we have suffered in years 2020, 2021, we have seen an increase of our inventory. We said we will go down gradually to the level prior to that period, and that's what we have achieved. It's been now 3 consecutive years that we've seen our level of inventory as a ratio to revenue going down, and that has benefited quite nicely to our working capital.

Shareholding structure has not fundamentally changed. As you can see, versus the end of last year, we -- the Dick family remains the majority shareholder with slightly more than 50% of the shares and 66% of the voting rights.

And to conclude, before we move to the Q&A, our final slide is on the first step of our 2030 strategy, which is obviously 2026. And I wanted to share our guidance which we have communicated in January, which we are confirming today.

We expect a solid net revenue growth next year between 5.5% to 7.5%. That is including the impact of Thyronorm, but excluding any potential additional acquisition we could be doing in months or years to come. EBITDA margin stands at around 17% for 2026. This is 1 point improvement versus 2025. And again, this is also at constant rates and scope, but including as well the Thyronorm impact for 2026. Cash generation, we expect EUR 80 million of cash to be generated in 2026. Despite an increase of our CapEx, we expect to have around EUR 125 million of CapEx spending for 2026.

I suggest we move to the Q&A session now, and we are very pleased to answer any questions you may have with Paul.

Christophe-Raphael Ganet from ODDO. Actually, a few questions. One will be -- the first one will be on M&A. Is it possible to have an update of the deal flow currently, the multiples and the chance we would have to see something coming out for '26? That's the first one.

The second one is related to the former acquisition, I'm talking about Globion and Sasaeah. Would it be possible to have a little update on Globion with the potential extension of the approval of the portfolio of products you had locally. You said originally that you wanted to extend those products potentially. Where are we there? And with Sasaeah, here again, some figures about the contribution, integration and was it dilutive for '25?

And last question is about the pipeline and the different partnerships and agreements that you have signed. Not the one you signed by '25, I mean. I'm talking about the previous deals. Is it possible, I mean, to have your view about the monoclonal antibodies, generations of products and JAK inhibitors? Elanco and Zoetis have been very vocal about those products. Where are you? Are you in the race? Will you be a follower? When do you think that it could change the market? Is it possible to have your view on that?

On M&A, we've been obviously repeating that, but you need to be 2 to dance, as always. So it's -- we cannot say anything on the probability of having something signed or announced. What we can say is that it remains a strong priority. That's what Paul shared. We have a full team which is dedicated to that. We continue to have that organization, that structure. We continue to look at things. We have also the mean of our ambition within M&A. But I mean, we cannot be more precise, as you can imagine, at that stage.

Second question on Globion and Sasaeah, I can start with Sasaeah. What we can say is that we've been quite pleased with the performance of Sasaeah so far. We are in line, even slightly better than our business plan -- acquisition business plan with the acquisition of Sasaeah. We knew and we anticipated that we would not have an extremely high growth rate with that acquisition. We know what the market in Japan is. But the performance has been quite solid. We anticipate the slight dilution of the profitability of Sasaeah during the first years because of the kickoff of some of the amortization linked to the building -- industrial building that they had. So that was part of the plan.

And regarding the integration, the team is in place. A lot of work has been done in integrating the overall structure within the Virbac company. And that has progressed extremely well. And also the local integration with the Virbac Japan local organization that we had.

And last one on Globion. The primary focus really on Globion was the local India development. The priority that we had was really to leverage our very strong commercial infrastructure in India in order to make the Globion available to a larger customer base, and that has worked quite well. We have diversified gradually our operation, find new customers as well.

And we are also here very pleased with the performance in terms of top line. We are significantly ahead of the original plan. We anticipated that the geographical extension would take some time. It was supposed to be focused in Africa and Middle East, that's what we shared. And that is ongoing, but obviously, that takes some time.

Final question was? The final question, I think, was on the R&D pipeline. I'll just give a little bit of flavor on that. Again, unfortunately, like M&A, R&D pipeline, something that we can't always get into all the details that we would like to perhaps. But just to say, yes, on one side, we do have programs, including things like monoclonal antibodies. At the same time, if you look at our growth rate, as we shared earlier, last 5 years, 8% CAGR, we believe there's still a significant space for alternative treatments, alternative therapies. If you see today, there's a couple of things as well happening. while, yes, some fantastic therapies and solutions on one side, pricing, cost of living, certain crises becomes also a significant theme, and therefore, alternative solutions, therapies are also going to be -- continue to be important.

There's also been certain of those therapies that have had certain pushback from the vet community in terms of unwanted side effects and other challenges. So yes, we're exploring. I can't say too much more, but we also believe that the strength of our Virbac model and what we've been able to do, you saw the 2025 launches, I think there was 8 or 9 launches on the page, of which there were at least 4 or 5 different formats, technologies. So we have that capability. So we'll continue to strongly invest in R&D.

And yes, we do have a number of different platforms across different technologies and also, of course, across vaccines, pharma and other OTC categories.

Arnaud Cadart from CIC. One question on the investment cycle. You are guiding for EUR 125 million of CapEx in '26. How should we see it until 2030? Is it a long investment cycle in which you are entering? First question maybe.

Just to complement on the M&A, do you confirm the firepower of EUR 500 million, I think, that we were mentioning recently? And 2 points maybe on the blue tongue and the vaccination, is it bearing a risk on '26, how business affect on that? And lastly, maybe on Australia, there seems they had some new droughts in Australia, so maybe it can -- it could affect your business here.

So on the first question on the CapEx cycle, we expect, and that has not really changed, several years at above EUR 100 million. We have a heavy transformation -- industrial transformation program. We have many new sites that we are building for the future of Virbac, vaccine new sites in France for dog and cat vaccines. We have a new petfood unit, a new logistics center that we have shared in the past. So it will require us for several years above EUR 100 million. So that's the first answer.

The second one on the firepower, it could even be above EUR 500 million. It really depends on the target that we can, on the level of EBITDA of the target that we will incorporate as well. What we've shared in the past, just to give an order of magnitude, is that between 2 and 3 in terms of ratio of net debt on EBITDA could definitely be feasible. Above 3, there is a nice opportunity or several within our programmatic strategy, there are several that put us above 3. But we have a good plan to come back with potential synergy and all of that to below 3 in the foreseeable limited reason of time, then we could contemplate that as well. So we have a significant firepower when you compute those figures that could be even above -- beyond EUR 500 million.

Your next question, yes, the blue tongue. So yes, and that's the -- we know that there are cycles in the farm animals. That's also the beauty of being both on companion animal that is definitely less prone to cycle versus farm animals. So when there is an epidemic, you can have a strong demand for 1 year, and we know that the demand -- and that's a good thing in a way because it means the blue tongue epidemic has been -- is limited in terms of development that could have an impact. But all of that has been included as part of the guidance that we have communicated.

[ 24 ] drought in Australia, so is there any -- something to say on that?

Yes. So that's what we've seen historically with Australia, and that's also part of the cycle within farm animals, some countries are and some activities are exposed to weather. We know when it's humid, more parasites, you have more grass. So it's a better time for the farmers and they need some of the products that we are offering. And to the contrary, when you have a dry time, you could have an impact, and that's what we've suffered for the past 18 months.

The situation was much better in 2025. The market has grown again in -- has rebounded in 2025. What we've seen, we had also some stock adjustments that we shared, which explain part of the dynamic that we had last year. But all of that is beyond us. We expect still a difficult year in Australia, but more for competitive reason. But again, that's also been computed as part of the guidance that we have communicated.

Delphine Le Louet from Bernstein. A few questions on my side. And coming back to the very beginning in between the mix of -- Sorry for that. In the mix when it comes to the volume and the price, and so can you tell us, you mentioned effectively a bit of a crisis around the world regarding the cost of living impacting the animals. And so can you come back into this pricing evolution you've been seeing, and probably making a separation in between the companion and the farm? How should we consider that in the next 2, 3 years?

Secondly, back to the evolution of the margin, probably, Habib, for you. How should we think about the gross margin evolution and especially regarding the CapEx cycle? When are we going to see any activation of the impact of some of the restructuring or building up or whatever it is on the manufacturing to start to be visible into the gross margins? Or shall we consider in the near future to have a vision which is probably more driven traditionally with the traditional mix, regular volume/price? So first 2 questions, please.

Yes. So I'll start with the margin. I'd say a couple of words on the price as well. And if you want to complete then, Paul.

On the margin, the gross margin, so it's true that, obviously, the CapEx will have an impact in terms of amortization. We don't expect one single year where you will have a huge increase because of that. It will be spread. The go-live for those projects are not going to happen all of them at the same time. And on top of that, we expect for those projects to have a beneficial impact on the productivity, the efficiency.

So if I take one example is a petfood, and we mentioned that in the past, the petfood new site will enable us to increase the margin. We will internalize some production that are being made today by an external partner, and that will have a positive impact. So that will compensate some of the amortization that we will have.

So we don't expect a significant surge in gross margin in the coming year. To the contrary, the objective is to improve gradually that gross margin and the trajectory that we have.

On price, so you asked a question over the past 3, 4 years. And I'll comment -- I'll make first a generic comment, which is, we've shared that in the past as well, it's quite difficult to comment on the price because of the number of products that we have and the dynamic around those products on price, which could be very different from one to the other. In some categories of products or some of our products, we are in a monopolistic situation. So the price elasticity is much easier than when we are in an undifferentiated generic, and we have that type of product within our portfolio even if it's not the majority. And here, the competition could be fiercer. And then we can have some -- even some dynamic of price decrease.

But if we look at the average, obviously, what we've seen is linked to inflation, a significant price increase after the strong inflation, and that has gradually come down to what we've seen this year at 3%. We expect next year -- and I'm talking here not taking into account the crisis that has just recently been happening. I can comment on that later on. But prior to that, the expectation was around 2% approximately in terms of average price increase across our portfolio.

And then there is a question, obviously, of what is going on as we speak and the impact of that. There are 3 elements that we are looking at. The first one is obviously the impact that it has on some of the -- both activities, transport, for instance, and buying on some of raw materials. So we cannot exclude, depending on the duration of the crisis, that we see some impact there, and that could obviously has an impact on the price that we have versus our customer. But it's really too early to tell and to say.

The second one is a disruption in the supply because of issues that we could have with transport and all of that. We don't see that happening as we speak. We see longer duration, but that's the same for everybody, but no blockage of our product, and we have some stock also to compensate for that. So for the time being, we don't see any impact linked to that. But obviously, the situation could evolve and could change.

And so price, the last one is obviously the activity in the areas where the crisis is happening, Middle East, notably. And here we have a very limited amount of revenue that is being done in that zone. It's below 1% of -- significantly below 1% of the group revenue. So here as well, we don't see any potential material impact linked to that.

Some questions. We have some questions on the line. First one is, how do you expect to win 100 bp margin points in 2026? Have you a target for the midterm?

So the target for the midterm has been shared. It's 20% EBIT adjusted by 2030. We are at 16% -- around 16% in 2025. We expect 17% next year. So the 17% is a mix of some reversal of the temporary effect that we had this year. I was mentioning the temporary shutdown of the antigen production site. So that will reverse. The production is ongoing, so it will reverse in 2026, and that will have a positive impact. And the remaining will be the operational lever.

Obviously, usual operational lever of our activity, we will benefit from the solid top line growth, and by managing -- continuing to manage carefully with a strong operational discipline our cost base, we'll be able to gain that additional 0.5 point.

I can also mention to be very precise that we have a positive impact from Thyronorm also, which will play on the 1 point increase. And at the same time, we expect a slight dilution, if you compensate for that on the R&D investments. Obviously, we've been around 8% for now 2 years in a row. We may be slightly above 8% further at the end of 2026. So those are really the 4 main drivers that will impact our profitability in 2026.

Looking forward to the petfood business. Can you tell us what is your first feedback where we are in terms of market penetration? Give us the example of what is happening right now when it comes to the mix, distribution mix, where we are, what are the targets. Can you be a bit more vocal on that and so we can have a bit of perspective coming out?

Sorry, just to be clear, specifically on total petfood?

[indiscernible] specialty.

Okay. I mean as Habib shared, you saw in 2025, and Habib, correct me if I'm wrong, but it's 2 or 3 years, I think, in a row of double-digit growth on petfood. So this continues to be a strong, strong growth driver for us. And that continues to be in the existing markets where we're present, but also more and more that expansion into further countries.

Habib specifically mentioned the example of Turkey, but across Europe, strong momentum on petfood in general. We clearly see a shift in -- overall in the petfood category towards more specialized therapeutic solutions, which overall is favorable for Virbac because that's very much our heartland. That's where we really come from.

A big part of our portfolio is more specialized therapeutic for kidney, for weight loss. That's really the strength of Virbac and the vet recommendation that comes with our petfood. As you know, we're not really playing in mainstream, supermarket-type petfoods and price ranges. But you can see from the financial performance and from our strong symbol with the investment that we're making in a new petfood site, that we see and you saw it as well as one of our Supercharge platforms, we believe that we still have significant positive momentum ahead for the petfood category.

And Virbac is today, and to me that's a really exciting part of our story, really the only true animal health player that has that full view of animal health from -- right from nutrition and prevention with vaccines through to treatment with medicines and other therapies.

And the more and more I learn and talk to vets, that true view of health, just like for us as human beings, starts from prevention, starts from nutrition. And it also gives us an ability, as you see with something like Vikaly, to look at conditions and therapeutic needs regardless of the form or the product that goes with it. So we get to look at what's the best way to treat kidney renal disease right from, again, nutrition through to other therapies. And that's something that today, at least, is quite a unique position of Virbac. We're really the only pharmaceutical animal health company with that petfood part of our business.

Right. So -- and more in detail about the manufacturing, where are we in terms of the yield? What's the plan in terms of capacity? How should we think about the capacity in the next 3 years?

I mean the investment that we're making and that is underway and on track would be something that would significantly, significantly increase our capacity, i.e., it would allow us to bring all of the existing external manufacturing that Habib mentioned in-house for -- at least for Europe, which is really our strength at the moment in petfood. It will allow us to not only bring all of that in-house, but also the additional geographic expansion in this part of the world that we see for the next years ahead.

So this is an investment, of course, not just for the short term, but we -- an investment that would give us significant more capacity for the next 5, 10 years in petfood.

All right. And so are we talking about 3 to 5x outputs from where we are now, or 10x?

It's a little bit difficult to compare just only because of the way we currently supply. But you could certainly say that it's more like 3 to 5x capacity versus our existing setup.

All right. And coming back to first part of my question when it comes to the distribution channel and possibly the multi-analysis of the distribution, can you tell us the word and tell us where we are, what the game, how you want to penetrate direct selling, how is working -- buying groups, direct vets? Tell us anything, would be interesting.

Yes. I think the most important probably evolution that we see and that we're making very strong progress on, of course, with the vet, where we've been present, we continue to focus and do very well, and that will continue to be a key part because we're so focused on this therapeutic petfood model.

But to give you an example, we've been rolling out through 2025 our direct-to-consumer petfood platform into a number of countries.

And in those countries where we've gone live with that new platform, we see a significant uplift in the subscription rate and the repurchase rate of those consumers. So we see a very, very strong loyalty that comes through by having that direct relationship with the customer, being able to really have a more one-to-one conversation with them.

Now that's a program that's rolling out still into 2026. But that's one part. Of course, on top of that, we have platforms, the Zooplus here in Europe, the Chewy in the U.S., where we also start to take back more control because, previously, this was not really managed directly by Virbac. This was happening through third parties where you don't have any control over the quality, the materials, the information that's being shared. And we start to take back much more control of that relationship to ensure that, of course, we want to make sure that we show up with the right information and with quality product that arrives for the consumer. So a number of pieces happening across those different channels.

So a question on the top line guidance. You are forecasting slower growth in 2026 than in 2025. Can you tell us more about this?

Yes. Indeed. One element is the expectation of the market dynamic for next year. We -- Paul mentioned it, the market has been extremely dynamic in 2025 at around 7%. We don't see that lasting. We think it will slow down at 4%, 5%. That's what everybody is expecting. So one element, one reason is linked to that, the dynamic of the market.

Another question on the guidance. Virbac will invest EUR 25 million more in 2026 versus 2025. Can you give us more color on this increase?

It's really linked to the phasing of some of the projects that we have that are entering into intense momentum in terms of spending. One illustration is Bio5, which is our new vaccine site in France that I mentioned. 2026 will be probably the year of the highest investment for that. Obviously, it's an investment that is spread. It's around EUR 100 million, spread to -- within several years. But 2026 will be a year of very significant investment for that project. So it's really linked to the phasing of some of our big projects.

Next question is related to the margins. Could you clarify how much of your 2026 margins trajectory depends on internal efficiency gains versus external market factors? There's another question, the question, I will come back to it.

On the margin, all of it is internal. It's what we can deliver and what we will be delivering by controlling our cost base and leveraging the top line. So if the question is more related to the operational lever, which is what is driving by the top line is what I mentioned, it's 0.5 point, but still it requires some strong discipline to make it happen.

To what extent do you see scope for productivity improvement in manufacturing and supply chain that could offset rising regulatory and compliance burdens?

That's a strong focus for us. You've seen within the first pillar, the Fund our Growth, which is the last one. A big element of that one is productivity. We know that we are below some of our benchmark in terms of gross margin. It's an area of focus. We have some projects in place in our manufacturing sites to improve the efficiency, the productivity. So it's definitely an area of focus that we have.

And as rightly said within the question, it's a good way also to compensate for the increased regulatory requirements that we see in many parts of the world, which is a constraint and it's also a strong barrier to entry within our industry.

Next one is a little bit more strategic, maybe for Paul also. Could you quantify how much overlap you see between your chronic care therapeutic classes, derma, gastro, and renal and the fastest-growing therapeutic nutrition segments in the U.S., and whether cross prescriptions between pharma and diet could create incremental revenue pools?

Yes, it's an excellent question, and it's exactly the way we think about those growth drivers and those growth platforms. We don't think of them as a product. We certainly don't think of them as a regulatory classification, Rx or OTC or vaccines. In the end, what the pet owner, what the farmer, but also what the vets want, of course, is a great solution, a great outcome for the animal. And the regulatory pathway to get there, we're rather agnostic to that. And we have this benefit of having the portfolio across all those different classes.

So we really want to start from the therapeutic area, the unmet need of the animal or the convenience and the challenge for the pet owner or carer, and really come at it from that way. And exactly that, we see an opportunity with some of our platforms where we have positions of strength, where we have superiority, to then bring complementary solutions.

So mobility is a nice example where we have both a therapeutic solution, which is performing really strongly in the U.S., but also a petfood that can be connected to that to provide complementary benefits and, of course, a certain amount of synergy in the way we go to market and talk about and develop the science behind some of those solutions. And we believe that can go even further across those different therapeutic areas. So yes, it's really the growth drivers are not a product. It really is a platform that we believe we can invest behind over these next 5 years and expand further.

Last online question. With the current FX environment, what do you expect for the full year impact on revenues and margin?

Unfortunately, so far, we don't expect a positive impact in terms of FX. What we are seeing for the beginning of the year, and you will be updated in April when we will publish our Q1, but what we're seeing is still a negative evolution of the FX when comparing 2026, the first 2 months versus the first 2 months of 2025. Yes.

I'd like to come back on the direct-to-consumer strategy. Is it possible to have first some aggregates in the market at Virbac percentage of sales, for example? And what is -- or what are, sorry, the key factors of success here? What do you think you have on which you can capitalize? And what do you think Virbac do not have to be a good player here? That's the first question. So D2C.

Second question is around petfood. Is it possible now to have more granularity by spaces, not species, but spaces, geographical area, sorry. And where do you see growth for the coming years? We have understood that it will be double digit, but do you see that you're still ramping up slowly in the U.S.? And can you come back on the reasons mainly?

And last point is on Vikaly. Is it possible to have what's your first feedback from the market? And what would be the peak sales for such a range of products?

Remind me your first question -- yes, the direct. So we don't provide any details on the structure of our top line by channel. So we won't be able to answer that. We can comment qualitatively on our product. So it really depends on products. Some products have a strong part of their revenue that is linked to digital channels. That's the case, for instance, for the dental product in the U.S. That's the case for petfood in some countries. But it doesn't mean that -- and that was a comment of Paul, it doesn't mean that the vet is not part of the loop. And that's the positioning that we have, with a strong science and the vet recommendation and endorsement. But the split by channel is very much dependent on the product that we have.

Your second question, and I will let Paul comment on Vikaly, the second question was the split of sales of petfood by geography. So here as well, we don't go too much. I won't be very specific and I won't give you some figures by geography. What I can say is that, obviously, France is the #1 country for us in terms of petfood. We have a significant market share. We've been in the market for a very long time, much longer than in the other countries in terms of petfood availability.

And we know that the petfood is a slow takeoff. That's what we've seen in many, many geographies. Then we have some emerging position in many other countries in Europe: in Germany, in Spain. We have some very strong dynamic in some Latin America markets. In Mexico, for instance, we are doing very, very well with significant year-on-year double-digit growth, even 20%, 30% for some years. So we've been able to grow very nicely in that market. Turkey as well has been a strong country for us in terms of petfood. We are very strong there.

And you know that more recently, we have geo-extended the products in many other geographies in Asia. And it's still a little bit early, it's a slow takeoff. So it will take some years to start to have a sizable position.

And I can finish maybe by commenting on the U.S. The situation has not fundamentally changed. You remember that we've made a first launch, but it was with a diet only and not the therapeutic petfood. The majority of the market, the vet market in the U.S., is really therapeutic. So we are working toward making available our therapeutic petfood for the U.S. And that will enable us to relaunch the products. Vikaly, maybe some words?

One quick word back on the omnichannel and the capability piece. I do believe it's a strong opportunity for Virbac. We have that very strong vet heritage. We do that really well. Habib mentioned the example of something like dental and toothpaste. We're the #1 -- take example of U.S. because it's a little bit simpler, but we are the most recommended dental brand in the U.S. by the vet.

If you compare our market share for products bought in the vet clinic where we're a strong #1, I mean, a strong, you could say, dominant #1, compared to our market share today online where, of course, many consumers, after getting the first purchase and recommendation from the vet, look for convenience, especially for products like dental, which they're buying every single month. Today, if you compare our market share with vet compared to online, we have a significant opportunity to evolve that model, to make sure we continue to get our fair share in the online space.

It's not something that's not been done at Virbac. We've been on that journey. But just given our heritage and where we come from, still an opportunity to bring those, let's call it, more FMCG capabilities on omnichannel, ensure we have the right content that we're showing up when and where people are looking for us and that we really benefit from. Because having or being the most vet-recommended brand is exactly what in today's world of misinformation and complexity, exactly the sort of thing that many consumers are looking for in that moment of purchase. So an opportunity.

Of course, we need to build some of those capabilities. But it's not new. It's not that we haven't started. But it will be something that we'll be focusing on. It was mentioned as part of our Strategy 2030, that second pillar around innovation and capability building. And we called out that omnichannel piece is really the key one that we'll be doing there.

On Vikaly, we launched in France in October and then began the rollout country by country just because of regulatory reasons across a few more markets at the very end of '25 in a few more European countries. It's too early to -- and we won't disclose individual product sales, it's too early to give too much of a flavor.

The thing that excites me is the vet reaction, the customer reaction, which is just strongly, strongly appreciative that, for a chronic condition, which again is difficult to treat, which for potentially 10 years of the life of a cat, the only solution today is a daily pill and daily medication, that we're able to bring something as simple as a petfood, which is already part of the life of the cat and owner.

Now the reason why Habib says that in the petfood space we see that it's a slower buildup, is that any pet parent who's experienced trying to change the petfood of their pet knows that it's a moment of a certain tension, unease. And of course, there's also an element of simply their pet becoming used to a certain petfood and product. And every time you try to make them -- or they think about changing, it comes with some certain anxiety and it comes with a certain adoption period for the pet.

That's why, in general, changing the petfood might sound simple, but requires some patience. Obviously, for a medicated petfood, it's even a step further because we need to, first of all, ensure that the vet changes their prescribing habits and that the vet takes the time to explain that to the client, to the pet parent and to really talk them through the process of how to do that.

That said, the reaction from the vets is incredibly positive, incredibly appreciative of the efforts we've made to bring such an innovation. And I hope that in '26, we can give a bit more flavor on how it's performing. It's very early beyond just the initial vet reaction.

Finance guide. Just 2 questions. First, can you remember what was the negative impact of the shutdown in 2025 in percentage on your margin? And does your guidance of 17% for this year include the negative impact of change you have right now?

So 0.5 point, that's what we shared for the negative impact of the temporary shutdown of that antigen production site in 2025. And yes, the guidance in 2026 includes the recovery of that.

[indiscernible]

No, we guide at constant exchange rates. It's a guidance at constant scope and constant exchange rates.

Thank you very much. If no one has any more questions, we will close this meeting. On behalf of the Virbac team, I first want to thank our host, but also thank you all for your presence and your loyalty to our company. We are very happy to have you here. And again, you can find all the materials online on our Investor Relations section. Thank you very much to everyone.

Thank you.

Thank you very much.

Good afternoon to all, and welcome to the Virbac 2025 Half Year Results Webcast. We are very pleased to have you join us. Today's call is hosted by myself. I'm Sandrine Brunel, Head of Corporate Communications; and Taron Hovhannissyan is Head of Finance, M&A and Investor Relations. The presentation will be given by Paul Martingell, our new Chief Executive Officer; and Habib Ramdani, our Chief Financial Officer; and Deputy Chief Executive Officer.

Before we begin, I'll remind you that the slides and additional financial materials presented here are available in our Investors section of our corporate website. The replay of this meeting will be available at the conclusion of the meeting. [Operator Instructions] It's now my pleasure to turn the floor to Paul Martingell.

Thank you, Sandrine, and good afternoon, everybody. It's really my pleasure to be here my first results presentation in Virbac. And especially to be here at a time where we're announcing a very, very strong and solid first half of the year, which, of course, has got nothing to do with me. It really is thanks to the continued strong performance and excellent work of Habib and all the team around the world at Virbac.

I'm absolutely delighted and excited to join the company. As you can imagine, it's been some time that I've been having conversations with the company, reading about the industry and learning about the incredible world of animal health. And I couldn't be more excited to finally have joined. It's day 11 for me. So apologies if I'm not able to answer the most detailed questions, but I'm very, very lucky again to have such a strong team and especially to have Habib here with me today, who will be able to answer those questions. And in the future, I'm sure, and I look forward to having deeper discussions and conversations with you all.

Just very, very quickly, I've had a career of over 25 years now across FMCG and Pharma Consumer Healthcare businesses. The last 11 years between Boehringer Ingelheim, the merger and integration with Sanofi Consumer Healthcare and then the acceleration and eventual value creation by spinning off that business into the propeller business unit. So a very interesting experience. I've had the pleasure and the privilege to work all over the world in the Americas, Asia and across Europe. And do hope that I can bring a little bit of that international perspective and flavor to this great Virbac business.

But for now, my only priority is to onboard, to listen, to learn, to spend time with our team but also with other key stakeholders, including yourselves, I look forward to engaging with you to listening and hearing your perspectives on the industry and the Virbac business. And to engaging in the conversations that we need to have to see how we can continue. First of all, the great performance that Virbac has shown over the last years. It really is incredible to see. I think we've broadly doubled the size of this business over the last 10 years. And therefore, of course, my first priority is how we can continue and perhaps accelerate that great performance, but also how we can then shape this future into the 2030, 2035 horizon, given the exciting and dynamic changes happening in animal health.

Again, I very much look forward to engaging with you much deeper in the future. But for today, it's really a pleasure to hand over to Habib who will take us through the majority of the presentation. I will be here, of course, for any Q&A, if you should have any questions later on. But again, thank you for your attention. Thank you for your engagement with Virbac and over to you, Habib.

Thank you, Paul, and we are extremely happy to have you on board to lead our next phase of development, Paul. So I'm going to take you, as usual, through our financial results as well as say a few words on strategy execution and perspective. And as it has been said, we'll end up the session with a Q&A.

So very briefly a summary of what we have achieved in the first half 2025, you can see that we have delivered a very solid top line growth during the first half of 2025 with 5.6% of organic growth. And it's a very same top line development as well. It's same because it's a good mix between price impact at around 3% and volume impact at 2%. We have also had the benefit of contribution of new product launches. I will come back to that later on. And finally, this performance has been delivered with top line growth in all of our geographies with the exception of Pacific, I'm going also to come back to that.

So that's for the top line. Regarding the EBIT adjusted, we have posted EUR 135 million of EBIT adjusted for the first half of 2025 and which translate into an 18.3% of EBIT adjusted as a ratio to top line. First, it's globally aligned with our expectations. So no surprise for us with that level. it is, although a bit decreasing versus last year, as you can see, by 2.4 points at constant exchange rate, and it's essentially linked to temporary effects and calendar effect as I'm going to go through in the next slides.

The net result stands at EUR 82.2 million for the first half of 2025, which is slightly below last year, but again linked to the EBIT adjusted evolution as well. We have had financial cost increase for this semester linked to the exchange rate, notably the CLP, the Chilean Peso which has evolved negatively versus the Euro, and we have part of our Interco debt that is not covered. So we are having that impact for the first semester 2025.

Let's move now to elements of balance sheet and cash flow. You can see at the bottom of the slide that our net debt stands at EUR 200 million, slightly above that, which is an increase of EUR 30 million, the consequence of three elements. First, our net cash flow is more or less at EUR 100 million, slightly below EUR 100 million. Evolution of our net cash flow is in line with the evolution of our operational results. And we have 2 further elements. The first one is the working capital requirements at EUR 72 million.

It's the usual seasonality impact that we have. We have working capital requirements quite high during the first semester and then a positive development during the second part of the year, which is very typical for us. It happens every year, and we have seen that this year. Nonetheless, it's slightly below last year. Again, this is linked to some work that we are doing to maintain our level of stock inventory. That is an area of focus for the past years now.

And finally, CapEx, you see that we have increased our level of CapEx, only double our level of CapEx spending when we compare the first half 2025 with the first half 2024; this is significant, yes, but it's deliberate. It's deliberate and it's linked to the rollout of all of our industrial transformation and the main projects that we are engaging in.

Very briefly on the exchange rate impact, you see that we are having a negative impact on both the top line and the bottom line with a good portion of it coming from Latin America, as you can see on the slide, with the size of the bubbles. And in addition to impact in absolute value, we are also having an impact in our ratio of EBIT adjusted, which has been decreasing by 0.7 points linked to the evolution of the exchange rate.

So this is for the big picture. I will move to sharing with you some insights on the revenue growth drivers. And then I will move to the P&L statements, balance sheet and cash flow and will move to the strategic elements. So top line, I share it slightly above 7% evolution and 5.6% growth at actual rates and perimeter, which means without the positive impact of the acquisition of Sasaeah in Japan.

If we look at on this slide where this growth is coming from, from a geographical standpoint. We can see the very solid development of our top line in most of the geographies, nearly all of the regions with the exception of Pacific. We are decreasing by around 8% in Pacific. I've had the opportunity to comment on that at the end of the first semester. We have suffered from climatic and market conditions in Australia, notably which impacted our top line dynamic -- impacted the market and the top line dynamic.

The market has started to rebound in the first semester. We have not really entirely benefited for that linked to some stock impact that we had with one distributor notably. But we are very confident that we will see a rebound during the next part of the year, and I'll come back to that in a minute.

You can see that we have a very solid performance in the Americas, both North America and Latin America. North America is growing 6%. I'll come back to the performance of the U.S. in the next slide.

So let me concentrate in Latin America. We have a very solid 8% growth in that region, which is fueled by our two main countries, Mexico and Brazil, Brazil has had a nice rebound during the second trimester, after our first semester that has been a little bit more difficult. We are benefiting from a nice dynamic in our Ruminant product portfolio in that country. I'll come back to Mexico in the next slide, but we're also having a good performance in Colombia.

The only areas where we are lagging a little bit versus last year is Chile. But it's not a surprise. It's what we expected. We have notably one parasiticides product that is suffering against competition. We used to be in a monopolistic situation, and we are now facing another entrance, which has an impact on both the volume and our price, but again, not unexpected.

Europe, 7.2%, very solid growth in Europe, a lot of countries, a lot of subregion in Europe are contributing quite nicely. This is the case for Western Europe with a nice development of our Ruminant portfolio as well as companion animal, the case for Central and Eastern Europe as well. We are also benefiting from the positive impact of the acquisition in Turkey, I will come back to that. So a nice performance overall in Europe with maybe the exception of France where we have a more stable dynamic for the first half, but I'll come back to that in the next slides.

EMEA, which is India, Middle East and Africa for us a very, very solid excellent performance, 8%. India contributing nicely to that development. And finally, far east Asia, you see the double-digit growth, which is essentially attributable, obviously, to the acquisition of Sasaeah that has a nice impact, obviously, on that region. A part of that at constant perimeter, the top line growth is at around 3% for far east Asia, negatively impacted by the market conditions in Vietnam where there is a swinepox epidemic that is impacting the market and us. But apart of that, a good dynamic in the other countries and the renewed positive dynamic in China as well after a first semester that has been more at on.

I wanted to take a few minutes to talk about some countries. The first three countries are the ones that are contributing the most in the top line growth in absolute value, Mexico, U.S.A. and India. And France and Australia are two countries from our top 5, where we've seen a stable growth for France. And as I mentioned, a decrease of our top line performance in Australia.

So Mexico, 15% growth, a very nice development with a strong contribution of some of the product that we are targeting. You see pet food, 40%, Mexico in terms of pet food activity for us is part of our top 3 countries. We are delivering year after year and taking some nice position in that country. We're also having a development of our companion animal vaccines. As well as some swine vaccines that have been recently launched in Mexico. So a very good performance across the board. And looking forward, we expect also double-digit growth for the end of the year.

U.S.A., 6% growth for the first semester. We will end up -- we expect to end up at a double-digit growth as well. It's actually 6%, but with a negative and temporary effect on the stock level at distributor. The sellouts are quite positive, would be at double-digit growth, slightly above 10% at constant level of stock at the distribution. And it's coming from the product that we are targeting dental, specialty and dermatology. So performance in U.S.A. that is quite aligned with what we've been doing in the past.

India, 6.8% growth at constant exchange rates for the first half 2025. A strong performance here. We have a very diversified activity, a solid backbone in India on Ruminant, but we are a semester after semester diversifying our activities in India. And you can see that the growth is coming from all different angles.

And in addition to the top line growth, we are also improving our profitability in that country. So a very solid performance, and we should expect a similar trend for the remainder of the year with one possible question mark linked to the indirect impact on the overall Indian economy and market linked to the tariff. So that's only question mark that we may have on that country.

France, minus 0.4%, so more or less stable. We used to have some growth in that country. It's essentially linked to two product lines. One of them, we shared that earlier this year. On pet food, we have seen a slowdown of our pet food activity in France with notably one of our e-commerce partners that have seen some sales decrease, and we are also having some impact, we think during the first semester linked to the introduction of a new packaging. So as we moved from the old to the new packaging, it may have disrupted a little bit the supply chain.

We have also an impact on vaccine. We are slightly decreasing on vaccine. We have had a very, very solid, extremely high 2024 years. You remember that we have had a strong rebound in vaccine especially during the first semester. So we are comparing to a very high base, and we have some competitors that have also returned to the market after some stock out on vaccine. Looking forward, we expect back to growth. We have some positive early sign of development -- redevelopment rebound of our pet food activity with some promotional activity that has been done to stimulate the demand with that e-commerce platform as well as now the new packaging introduction that is behind us. So that's for France.

And finally, Australia, you see negative evolution of our top line. I commented about the overall market condition. There are signs of recovery that are quite positive with the price of meat as well as the climatic situation. So looking forward, we expect a progressive rebound of our activity in Australia. So this is a snapshot of some of the key countries from a contribution standpoint, and we thought it could be useful to say a few words on them.

Let me move now after we've covered the performance by geography, let me move to the performance by segment and by subsegment within companion animals and farm animals, you see that farm animals continue to represent around 40% of our turnover, companion animals 60%. If we look at companion animals, where the growth is coming from, there are two central pillars that are powering the top line development for that semester, one of them is pet food, a strategic product portfolio that we have. You see a double-digit growth, we are benefiting from a nice development and compensating the situation in France with top line growth in many geographies, including Mexico and obviously, the benefit of the acquisition of Mopsan.

We have also the specialties product line that is doing quite well. We are benefiting from some product launches that is fueling that subsegment, including Ursolyx and as well as Trilotab, which is a product against Cushing disease for cats and Ursolyx is a movement disorder type of products. So they are reinforcing our specialty franchise and contributing nicely to the top line growth, enabling us to have a double-digit top line growth.

You see vaccines stable after a record year in 2024 with a very significant rebound again, especially in the first semesters. So we've been able to maintain the top line growth in vaccine. And then parasiticides, antibiotics, dermatology and others that are also contributing quite well between 3% to 6%. So a very solid performance, 5% at actual rate and 7% at constant exchange rates.

Let me move now to farm animals. You see the nice dynamic in farm animals is powered fueled by a very strong performance in our Ruminants segment, which is also a testimony to our portfolio, the diversity of our portfolio. Ruminants has been doing quite well for that semester, and we expect it to continue. Also, it may a little bit slow down. and it's being driven by some of our product lines such as antibiotics with a double-digit growth, nutritionals as well as vaccines that have done quite well during the semester, we had some nice vaccines launch, and we won a tender in Europe for one of our vaccines, which has had a nice impact during that semester.

You see aquaculture slightly below last year, essentially linked to the parasiticide product I mentioned earlier on which we have increased competition. but also a nice development, nice performance for farm animals segment overall, as you can see on the slide.

Very briefly, the sales breakdown by region and segment has not fundamentally changed versus what we shared last year. So let me move now to the profit and loss statement. So you see the yellow line, which is our EBIT adjusted, which stands at 18.3% versus 21.4%. We have a slight decrease in the ratio of our gross margin on material costs when we compare the first semester of 2024 with the first semester 2025. We have also an increase of our expenses, personnel and external expenses. Part of it is linked to the acquisition of Mopsan, which obviously we acquired as well in infrastructure. And the rest is linked to some of our projects, the development of our activity, the reinforcement of some of our team in industrial and R&D as well.

So overall, we are, as you can see on the slide, losing 3 points versus 2024, which is essentially linked to temporary effect versus last year. 2/3 of that decrease is linked to the gross margin where we have essentially 2 effects. The first one is linked to write-off, which is a typical element that we have within pharmaceutical companies. But we have had last year a level of write-off during the first semester of 2024 that has been quite low versus the level of write-off for the entire year.

30% of our write-off has been recognized in first half of 2024 and 70% in first half of 2020 -- in second half of 2024 last year, 30-70, whereas this year, we expect a much more balanced split of our write-off between the first half and the second half. So we see when you compare only the first semester, a significant increase of our write-off, but which is, again, only linked to a calendar effect versus last year.

So that explains part of it. The second element is the fact that we have stopped, closed temporarily one of our manufacturing sites to operate a maintenance activity, which was anticipated, but which has an impact during the first part of the year in terms of fixed cost non-absorption, which obviously will reverse as we resume the production during the second part of the year.

So those 2 are really temporary effects, which explain part of it. The remaining 1/3 impact is linked to the calendarization of our OpEx expenditure on sales, marketing and administrative as well as R&D, where we have slightly more balanced again, split of our cost in 2025 versus what we had in 2024. And to a lesser extent, we're also recognizing slightly more legal fees, temporary legal fees for that first semester.

So when you put all of that together, that explains the decrease of our ratio of EBIT adjusted, but this is completely aligned with our internal expectation. And we are very confident that we will end up at what we have guided for the full year, which is 16%. So moving from 18.3% for the first semester to 16% for the entire year.

If we go now down to the P&L statement, you see what I mentioned earlier, the financial costs, which are increasing versus last year, essentially linked to the negative impact on exchange rate for the CLP. And to contrary, you see the improvement of our tax cost, which is essentially linked to the decrease of our profits during the first semester. The effective tax rate is slightly increasing, by the way, when we compare first semester 2024 with first semester 2025, essentially linked to the mix of countries that we are having with notably the internalization or the acquisition of Sasaeah in Japan, the tax rate is slightly above what we have as an average for the group.

Let me move to the net free cash flow. evolution, you see and we compare on that slide, the first semester 2025 with the first semester 2024. We have generated a net cash flow of slightly below EUR 100 million. I shared that earlier during the summary. We are spending slightly more than EUR 50 million in CapEx. Again, no surprise. That was expected. The working capital needs stand at EUR 72 million, which all in all, when you put all that together, we have a net debt situation that is moving from EUR 168 million to EUR 201 million.

Nevertheless, our net debt on EBITDA ratio stands at close below -- significantly below 1 as of June 2025. So we continue despite the heavy investment that we are having, we continue to have a very favorable balance sheet situation, as you can see on the next slide with some very favorable ratio as well that put us favorably to consider some further acquisitions down the road.

The shareholding structure has not changed fundamentally versus March 2025. last time we presented, the company continues -- the share continues to be owned at slightly more than 50% by the Dick family, having also slightly more than 66% of voting rights. So this is it for the financial results. I will move to the second part of that presentation. I'll take a couple of minutes as we have presented some short-term results.

We wanted to take some moment to address also our midterm vision. As you know, we have a midterm vision that has been unchanged now for several years that represents our North Pole, our compass with a clear road map against which we are delivering with one clear target, which is to reach 20% EBIT adjusted as a ratio to net revenue by 2030. And we are on route to deliver that with the expected 16% at the end of this year of EBIT adjusted as a ratio to revenue, which again has been unchanged since January 2025 when we first shared it with our expectation for the 2025 years.

So these slides summarize our strategic framework. At the heart of it, at the center lies obviously our portfolio, where we have defined the how to win and the where to play. We continue to have 3 main levers for our transformation, the how to win, which are innovation, acquisition and competitivity, competitiveness.

Innovation, you know that we made the decision a few years back to increase our level of spending in R&D to accelerate that as a ratio to revenue, moving from around 6.5% to around 8.5%. So we will end the year at around 8.5% as a ratio to revenue of R&D spending, which enable us to increase the number of projects that we had within our portfolio.

Acquisitions, we've been quite active recently with 3 main acquisitions in the last 18 months. We continue -- that continues to be an area of priority for us, an area of focus. We have the team in place. We continue to be looking for programmatic M&A, small to midsize, and we complement that by a dynamic licensing that we are doing, and I'm going to comment that on the next slide to illustrate that on the next slide.

And finally, competitivity, competitiveness, we are relentless -- we have a relentless focus on competitivity, leveraging our transformation, all of our industrial projects as well as implementing in all of our manufacturing site competitivity program in order to boost our gross margin. So those are really the 3 key levers. We are applying them on the where to play, which is defined by geography, spaces and segments. So on geography, we continue to try to improve our positioning in all countries where we are present with a specific focus in U.S.A. and China, the 2 major countries.

We're trying to enrich our portfolio of products available for the Chinese market and to develop as well as we have had the opportunity to share and illustrate in the past few years our North America business by leveraging our current product, but also innovation as well as entering in 2 new segments, pet food and food producing farm animals in the U.S.

From Species, we have 2 backbones, as you know, companion animals and ruminants. We continue to be extremely focused on those 2 backbones for us. You have seen the nice growth of our ruminant activities during the first semester. We have also had a nice growth on our companion animal segment. And we have 2 ventures that we are continuing to nurture aquaculture and swine.

And in order to power that, we are also focusing on 2 important dimensions, process, digitalization with some transformation program. I had the opportunity to talk about ERP manufacturing execution system in the past, rollout that we are doing, modernization of those systems, and I'll come back to that on the next slide. And most important, our teams, our people, our talent, we remain committed to nurture the Virbac culture by working on our purpose, by working on ethics and by working on as well great place to work.

So I wanted to illustrate a bit of our progresses that we have made during the first semester of 2025 along the dimensions of that strategic framework.

First, portfolio, product launches. We've had an excellent contribution of some of our new products. I mentioned that Trilotab, Ursolyx, our swine vaccine that have been rolled out after having been launched in Asia that have been rolled out in other countries, including Mexico, as you have seen, we have also that new product that have benefited from a tender in Europe that has fueled the growth. So we have had a nice contribution in the first semester from product launches, and we expect more to come with 2 key products to be launched. Vikaly, obviously, our medicalized pet food. We've had the opportunity to talk about it. That's a unique type of product that we are going to launch in the coming weeks in Europe.

Innovation. Our R&D pipeline is progressing well. It doesn't mean that we don't have setback, obviously, and that's part of R&D. We all know that. But globally, we are making some good progress. We are very proud to share with you that we have launched our first Chinese product developed in China. That was part of our strategy to accelerate the enrichment of our portfolio in China, and we've been able to launch the first product developed in China for China. And as we are working on innovation, new product, we are also managing life cycle of our existing products. And our R&D teams in some geographies are quite busy with submission of updated R&D and regulatory files based on the local requirements for product approval renewals.

Industrial transformation. I will be very brief. We have some key projects. You know that we have increased our level of investments. We are working on many of them in parallel with our biology unit, French logistics center and globally, we are making some good progress.

Acquisitions. We have nothing announced as part of merger and acquisition for the first semester. We are working, nevertheless, on some topics. We continue to be busy. It continues to be a priority for us. But obviously, we need to be too dense. And we are also working on continuing the integration of our recent acquisitions. We've been nonetheless, very active in licensing. As you can see on the slide, we had a very extremely solid first semester, much higher than what we had in the recent past with 9 commercial licensing deals that have been signed and 3 technological licensing deal as well.

Digital infrastructure rollout. I mentioned it, we have finalized. We have had the go-live for our major industrial transformation with ERP, Manufacturing Execution System and Laboratory Information Management System in France and U.S. And we are rolling out the wave 2 with an ambition to deploy these core model in all of our countries in the coming years.

And Great Place to Work. This is a key focus that we have. Each country is rolling out its own action plans, and we are working globally with a strong focus on diversity and inclusion. I wanted to end this presentation before moving to guidance with a quick word on integration, M&A integration.

We are very, very proud of the progresses that we are making on 2 fronts, Japanese acquisition and Turkish acquisition. You can see on Japanese acquisition, we are moving ahead on a lot of HR topics with a leadership now fully in place to drive our business in Japan. We are making some good progress in packaging harmonization as well to provide one single entity, Brand image in Japan following the acquisition of Sasaeah. And what is quite remarkable is the fact that we are able, at the same time, to ensure business continuity and even business acceleration.

And you see that we are ahead of our objective for the Japanese entities with 6% ahead of our budget. So we are delivering a very strong first semester while progressing on the integration, which, as you can imagine, is not necessarily a very easy one.

Turkey. We mentioned that we made a strategic acquisition. It's a long-term acquisition. Turkey market is an important market for Europe. It will continue to grow. We have that conviction. And through the acquisition of Mopsan, we have considerably secured and solidified our position in that market. You can see on the slide that we are also progressing, making nice progress in terms of integration in all dimensions, IT, HR, and we are also delivering some strong results at the end of the first semester.

So let me finish by sharing with you our renewed confidence on our full year 2025 guidance. We, by the way, share it first in January. If I remember well, we have confirmed it in March and now in July and now in September, we expect top line growth, net revenue growth of 4% to 6% with an additional point linked to the acquisition of Sasaeah, so 5% to 7%, including Sasaeah at constant exchange rate. We expect an EBITDA margin at around 16% at constant exchange rate, might be a little bit below that. Due to the negative impact of exchange rates, it's still tough to anticipate fully for the full year, but at constant exchange rate, we confirm the 16% and net debt evolution at around 80% is also confirmed.

So this is it for the end of June results presentation, and I'm very happy to open the Q&A session.

Thank you, Habib. Thank you, Paul. Wow, the Q&A session is definitely open. We have, if not 16, it will be 17 questions, a lot. So Taron, perhaps you can start.

Yes. Let's start with the question. The first one is coming from Laurent Gelebart. The question is, what is the total impact of semester 1 gross margin OpEx from the deferred costs? Is it around plus or minus EUR 10 million?

Yes. What we have shared is 2/3, that's what I mentioned, 2/3 of the decrease versus last year is linked to the gross margin and a good portion of that is linked to the temporary effect. I can try to be a little bit more specific. The impact of the temporary stop of the manufacturing site is a few million euro for the first semester. And it's also a few million euros of write-off impact that we are having. Again, when we compare to 2024, that was exceptionally low in the first semester of 2024.

Next question still from Laurent is what is the impact of ForEx on the EBITDA margin? Should we anticipate 70 percentage points similar to H1?

Yes. So Laurent answered himself the question. It's 70 basis points impact of exchange rate on the margin. So moving from 19% to 18.3%, just to make it simple. And it's difficult to really anticipate what we will have because obviously, it could change on a month-to-month basis. So between 0 to 70 points, it's something that we could be having for the entire year, yes.

Next question is from [ Vincent Norman ]. He asks for, can you comment on the impact of R&D spending in H1 '25 compared to H1 '24? Is this acceleration in R&D spending in line with your medium-term plans? Or have you been forced to accelerate spending to meet deadlines?

Yes. No, it's completely in line. We have 0.4 points more of R&D as a ratio to net revenue when we compare the first half 2024 to the first half 2025. So we have a slight acceleration of R&D spending. We guided for 0.3 points more for the full year. So with 0.4 points for the first semester, we are perfectly in line with what we expect for the full year.

Thank you, Habib. A question for Paul from Sarah Thirion. Does Paul Martingell, support ambition of a margin around 20% by 2030? Or should we assume adjustments for this forecast in the coming months?

Thank you very much for the question. Again, it's my 11th day, beginning of my third week. So far too soon for me to think about changing anything at all. What I do believe from all the conversations with the team with the investors is that our commitment towards the 20% in 2030 is really essential to prove the credibility of our team and the sustainability of our growth. And of course, we want to be a top line and a growth story, but that needs to be healthy growth. And so I believe that the 20% 2030 target is clear, has been shared and is what we will continue to work with.

I don't believe in any reason to change that. It's a great signal of operational excellence and healthy growth in the future.

Great. Next question is coming from [indiscernible]. The margin degradation in H1 is an increase in R&D efforts as a percentage of revenues. Is this a one-off effect? Or is there a shift from what had been previously announced?

No, no. It's -- again, it's -- this increase is perfectly in line with what we have stated for the full year. We said that we will increase for the full year, again, our R&D as a ratio to net revenue by 0.3 points to move to 8.5 and the 8.5 has been announced a few years back. So we finished the year 2024 at 8.2, and we said we will continue to 8.5, for the full year, so 0.3 points more. And we have done for the first semester, 0.4. So it's perfectly aligned with what we have said and with the vision to reach the 8.5 of R&D investment to revenue.

Thank you, Habib. So Sarah, we already answered the question you asked. So we go to the question of Drew. Drew, it's a question for you, Paul. Could you provide some context on how you would think about the future M&A? It might be too early, but any early thoughts on product lines, geographies, size and maximum balance sheet leverage would be useful.

Very good. Well, a little bit like the question to Habib earlier. It may have answered itself. It's definitely too early for me to come in with any strong perspective. I'm here to listen, to learn. I will be putting a lot of focus right now, of course, apart from just listening and learning on our execution in market with our customers, with the vets on our operational excellence. That's probably where I can add most value in the very short term to try to continue our momentum.

But in every conversation I've had, it's been very, very clear that acquisitions should and will remain a very, very strong part of our Virbac growth model. And I know the team has been working very hard. We've had conversations in the last week already about certain targets and certain opportunities. As Habib said, it always takes 2 to tango, but I can see already, and we've already spent time on M&A as a key potential driver to accelerate our growth and to also make strategic plays in certain areas, which you're already aware of. So there wouldn't be any surprise there in where we're looking. And we'll, of course, continue to update you as anything progresses.

Thank you, Paul. So Taron, I'll let you ask the 6 or 7 question of our friend, Christophe Genet.

Yes. Let's tackle them one by one. First one is, can you elaborate a bit on India contribution on profit? Is higher than group average? When do you see the subsidiary in 2030?

Thank you, Christophe-Raphael. So I cannot be very specific because we are not disclosing that type of information. What I can say, and we've been stating that in the past is India used to be below the average, and they've done a remarkable journey of improving the profitability in India year after year with the benefit of the top line growth and a strong focus on procurement and gross margin locally. So they are gradually improving, contributing to the improvement at group level as well, and they are not very far from the group average as we speak.

Next question is similar to the India contribution profit. What is the EBIT contribution for the U.S. subsidiary? And can you update us on the remaining carryforward tax loss credit?

Yes. So here as well, we are not sharing that level of details. But the U.S. is one of the key drivers for profitability improvement at group level. We've been able -- and we've shared that in the past, we have more or less a fixed cost structure at the level of the manufacturing site, commercial organization as well. So any additional top line translate nicely into bottom line. So over the past...

[Technical Difficulty]

We have technical issue. We are working on it. It's okay.

Yes. So we're back. Sorry, we had a technical issue that has been fixed by the team. Thank you for that. So I think I was cut off when I was answering the question regarding the deferred tax. So yes, we continue to have that. It has not been recognized in our balance sheet. If you remember, we depreciated it. We have never recognized them again in our balance sheet. So we will be able to benefit from that as we make profit in the U.S. It's been 2 years now that we have made slight fiscal tax profit in the U.S., and we've been able to reverse part of it, and we will continue to do that in the future, so that will have a positive slight impact on our tax income as we move forward.

Similar question. Can you share the top 5 subsidiaries in terms of EBITDA contribution?

We cannot. It's not an information that we are sharing. But I mean, as you can imagine, many of the top 5 countries in top line are also top 5 countries contributor in bottom line given the size of the top line.

What should we expect in CapEx for full year 2025 and for 2026?

Yes. We have stated that we'll be above EUR 100 million for 2025. You've seen that we are slightly above EUR 50 million. So we will be above EUR 100 million for the year. And that will be the same for 2026 and maybe a few years down. We have a very heavy CapEx program with some important industrial projects that we are moving forward. So nothing has really changed on that front.

Is it possible to have an update of pet food manufacturing of the new pet food manufacturing site?

Yes, we are -- so we have submitted all of the administrative requests for the new pet food site that we want to build to internalize our pet food production in France, in the south of France. So all submissions have been made. We have received positive acceptance of all of those files. And we are now in a classical, I would say, legal phase in France, where we have some associations that have submitted some legal claim that are currently being reviewed, which is a classical phase after you submit all of your administrative filing in France.

And in the meantime, we are very much working towards getting ready to lay the first stone of that project. So finalizing all of the contracts and getting ready for that. We'll have some more updates before the end of the year on that front.

Last question from Christophe Ganet. For H2, how do you see the market evolution and your expected price effect?

I mean we don't have a crystal ball. I would love to have a very confident answer on that question. What we've seen is on the data that we have is a continued dynamic Q1 market. We have received recently -- very recently, we are still analyzing them, but a very dynamic Q2 as well. So a little bit surprising with the level of dynamism. It's fueled by some innovation that have been launched by some of the animal health players, notably monoclonal antibodies and isoxazoline, the combination that are performing quite well.

So in that market, we are slightly below, but we don't fight with the same arms. We don't have those products and the market does not capture some of our product ranges such as pet food, which is not part of that and where we have a very strong development as well as some pet care products that are key central for us are not part of that. So if we restate for that, we think we are very close to that market.

But it's quite dynamic, 6%, 7%. We don't expect that to remain. We think it will ultimately stabilize at 4% to 5%, but we've not yet seen that for the first semester.

Thank you.

And we continue. We have still 1, 2, 3, 4, 5, something like that -- more than 5. The question is from [indiscernible]. Can you provide more details on the phasing of stock [ restriction ], product lines and geographies that are concerned as the production of the antigen, which was temporarily stopped, resumed.

So here as well, we -- I won't be too specific on the write-off. What is important is that, I mean, all companies have a certain percentage of their revenue that are written off every year. We are not different from the other. You can also have some good years and some more difficult years. It's a mix of quality. It's also for the quality and the safety of our product. If some production doesn't meet our guidelines, we won't release them, and we will written them off.

And you have some type of production that are more exposed to that, such as the vaccines biology product, it's more difficult than some nonliving type of product, if I may say. You can also have part of it that is linked to forecasting, launch of new product and you don't necessarily anticipate or some market evolution. We have, for instance, some write-off in Australia linked to the situation that I've shared with you.

So it's a combination of different nature. What is important here is more the phasing, and that's why we are talking about it. In the past, we are not really talking about it because, again, it's part of the business. And obviously, we are trying to optimize it and to decrease the percentage of it year after year gradually. It's also part of the improvement of our profitability.

But here, we are really talking about it because of the phasing. And again, last year was very unusual, 30% first semester and 70% second semester. And this year, we expect it to be more balanced. So it triggers an impact on our profitability, which is temporary.

So what do you estimate the annual revenue shortfall to be?

No, we don't have any shortfall in revenue. It's a stock that we have that are written off, but there are no impact on the top line.

It doesn't mean necessarily revenues, but on the margin, general loss, how much it would be?

Yes, we don't communicate the overall percentage of our write-off.

Next question is from [ Emily Pesci ]. Could you give us your point of view on the mitigation of tariffs this year and in 2026? You have communicated a gross figure. What is your view on the net impact, please?

For the tariff. For the tariff. Yes. So yes, we've shared that based on current available information, we expect the tariff impact to be at around EUR 4 million annual impact on our activity, which is shared that 80% of our revenue in the U.S. is made -- will be made at the end of 2026.

It's slightly below for 2025, but 80% at the end of 2026 will be made by products being produced locally in the U.S. So the impact that we have is on the 20% remaining and on the 80%, it's some raw material or excipients that we are using for the production that are being sourced from outside of the U.S. So this is the EUR 4 million impact. It's a gross impact. It's true. We may benefit from price increase to compensate for that. I say may benefit because we are not alone in the market. We are also very careful and very prudent in the positioning of our product versus the competition. So it's a product-by-product decision that shall be made to see how and whether we can offset all or part of that tariff increase.

So it's linked to the competition. So it's difficult to come up now with an answer. What we can say is that we are trying to increase our price whenever it's possible to compensate for any impact, inflation impact and also tariff impact.

Can you remind us about your ForEx coverage and cost impact?

Yes. So we are -- first, we have a natural hedging on the P&L, profit and loss. In many countries, we are producing locally. In many countries, we have local activities, local sales force. In some countries, we even have local R&D, for instance. So this provides us with a sort of a [ natural hedging ] which is working certain years quite well, some other years, not as well. This year, it was working a little bit less because we have been impacted in some countries where we are also benefiting from product coming from outside of the country in different currencies.

So that [ hedging ] -- natural hedging that we have depending on the years is protecting us more or less. So that's on the P&L.

Then we are obviously having an overall [ hedging ] strategy on the cash flow that we have between the different subsidiaries that we have to protect the cash flow, the flow of cash based on the buying in some currency in some countries. We are doing all of that centrally for most of the countries, not all of them, but most of the countries. And it's a yearly [ hedging ] strategy that we are having on the cash flow between the different Virbac affiliates.

And finally, we have some coverage as well on the balance sheet linked on the debt. We have some cross-currency swap that we are implementing. So I mentioned the Chilean peso. We are financing from France, our Chilean affiliate and part of that intercompany financing is protected through cross-currency swap. Given the price of that financial instruments, we have not covered 100%, but we are covering around 50%, 60% of the exposure. And the rest is not a cash impact. It's [indiscernible]. It's not a cash impact.

Still another question from Amy Lee. It's for you, Paul. What are your key focus in the next 6 months?

Well, thank you. Definitely, my first and absolute focus is really on learning; learning this business, this industry and of course, the wonderful and very successful world of Virbac. So I'll be spending a lot of time in the next 3 to 6 months visiting our affiliates around the world.

As you know, this is an industry with quite a lot of difference between different markets, India, Japan, Brazil, France, U.S.A. So really important that I spend time in the local markets, visiting customers, visiting vets really out there with our teams in the field, something that I believe very, very strongly in keeping an external focus.

At the same time as visiting our affiliates, I'll be engaging with as many stakeholders as possible. And as I said, that will include this group here where I would really love and enjoy to connect with you and listen to your perspectives on the industry, on the market and on, of course, Virbac and what we can do in the future.

Then absolute focus #1 is really, of course, trying to continue to drive the strong momentum that we've been delivering over the recent years and in the first half of the year. So really, how can we stay very focused after all the important investments we've made in CapEx, in R&D, in licensing to really make sure we execute with excellence, that we're really close to our customers, that we're really on top of making every single launch and every activity we do as big as possible to have the continued momentum, the continued space to reinvest to continue to grow in the future.

So for now, it will really be a little bit, I would say, back to basics on execution focus and driving momentum. Of course, over the following perhaps 6 to 12 months, I look forward to perhaps engaging with you and sharing with you our thoughts and our vision perhaps more towards 2035 and how we might want to evolve our current strategy towards -- to continue the strong and impressive growth this business has shown over the last 10 years where we've doubled the size of the business, what would it take and what can we do to look at a vision and ambition like that for the future. So that's really where I'll be putting my time and effort in the coming weeks and months.

Great. Next question from [ Vincent Norman ]. Can you be more precise about some setbacks with R&D pipeline? Any major R&D program impacted?

I mean it's part of the day-to-day R&D. All companies that have R&D knows that you are facing difficulties, you overcome them, you find new solutions. So what I wanted to say is that it's not like we have 100 projects in our pipeline. It's not like 100 projects are moving exactly the way you wanted. I cannot be more specific. We are not providing a lot of details, as you know, on what we have in our portfolio. But we will, as usual, in March, provide a yearly update on our whole portfolio. So stay tuned.

Next question from [indiscernible]. What about this one-off legal expenses that increased notably in H1? Is this related to the launch of future products? Or is it linked to more litigation? And if it is related to the later, what does it consist of?

Yes. No, it's there as well. type of litigation that all companies are having. We are mentioning it because we have a slight increase. I think it's EUR 1.2 million more first semester. So it plays also a role in the dilution of our profitability, and we know that it's temporary and it's versus 2024. But it's a little bit like the write-off. Every semester, every year, you have legal fees for some litigations that we may have in some of our countries.

Gentlemen, we have a question from Emily about transparency. So because of transparency, I'm going to transmit you the question. Can we expect more transparency on financial disclosure margin-wise per division in '26?

I mean we are already providing a lot of information from a top line and the overall margin at group level. For competitive reason, you can imagine that there are elements of our performance that we don't want to share publicly. Anyhow, whenever there is something material that is happening or whenever we have an evolution, we try to be extremely transparent in the elements that explain that evolution.

So we are perfectly aligned with the regulation in terms of what we are sharing, and we don't expect to provide -- go into more granularity as we move forward.

So last question from Laurent Gelebart. Could you comment on your licensing and commercial deals, big stuff?

Sorry.

Big stuff.

No, there as well. It's -- we mentioned it because we have never had really the opportunity to talk about licensing. It's -- we've said in the past at some occasions that it's a nice add-on to what we are doing. The team in all of our geographies are very much involved in that as well to identify opportunities. It's product that we add to our local pipeline. So it could be one product in one country, which is a good complement to our portfolio. We have the commercial infrastructure. So obviously, it has a nice impact on the bottom line. So a part of the 9, for instance, there is one nice product on which we have had some good results in some countries, and we've negotiated successfully with the owner of the product to extend based on the success that we had in some countries, he was willing to provide us with the license in some other countries. So it's also a testimony to the quality of the work that the team is doing.

And on the technological licensing, it's quite important to rejuvenate our portfolio. And here, I can be a little bit more specific because one technology license is a monoclonal antibodies on which we have made a publication on our website. So it's not for tomorrow, it's not for the day after. It's quite a long-term perspective for that new technology, but we are very happy to have been able to secure that, which again will be a nice add-on to our R&D portfolio.

Thank you very much. We have still 73 colleagues, analysts, investors that are connected. We have -- we went through the list we received in the questions section or in the chat section. So we may have come to the end of the meeting, dear friends unless you have still questions to ask, perhaps I let you a couple of seconds to see if something is moving on the chat. If not, I want to thank you all on behalf of the Virbac teams for your attendance and loyalty to our company and wish you a very good day and a good week as well. Thank you, Paul. Thank you, Habib.

Thank you very much.

Thank you.