Zoetis Inc - Ordinary Shares - Class A

Q2 performance missed expectations; organic revenue down, profit down - Reported revenue: ~$2.5B, flat YoY; organic/operational revenue: -1% - Adjusted net income: $781M, -2% organic - Portfolio split: International +6% organic; U.S. -7% organic - Big offset: Livestock +11% (strong); Companion Animal -6% (weak), especially Dermatology

Core driver / negative trend: tougher companion animal demand + more aggressive competition - Vet clinic visits declining (multi-year trend extended) and pet owners more value-conscious - Category shift: more revenue moving to urgent/emergency, while premium preventative/chronic pressured - Competition changed in a slower market: higher discounting/rebates/bundling/promotional incentives by new entrants → share pressure (especially in categories Zoetis pioneered) - U.S. clinic/pricing affordability + promotions are explicitly cited as worsening in key areas (Dermatology; U.S. parasiticides affected by affordability and promo intensity)

Full-year 2026 guidance cut (near-term pressure persists) - Revenue outlook: $9.12B–$9.32B, implying -3% to -1% organic operational YoY - Adjusted net income outlook: $2.57B–$2.62B, -9% to -5% organic operational YoY - Adjusted diluted EPS: $6.15–$6.25; reported diluted EPS: $5.55–$5.65 - What’s baked into the guide: management assumes trends persist through the year, including continued soft vet traffic and higher promotional/competitive activity; no market “stabilization” yet indicated by sales through July