Analysis of Geographic Areas
Zoetis Inc. operates in 2 regions: United States (U.S.) and International.
Area Profit Margin
Zoetis Inc., profit margin by geographic area
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| United States (U.S.) | 62.85% | 64.06% | 63.56% | 62.95% | 62.60% |
| International | 52.08% | 54.06% | 53.34% | 50.97% | 50.03% |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
An analysis of regional profit margins from 2019 to 2023 reveals a period of steady expansion followed by a synchronized contraction in the final year of the period.
- United States Market Performance
- The U.S. profit margin demonstrated consistent growth for four consecutive years, rising from 62.60% in 2019 to a peak of 64.06% in 2022. A reversal occurred in 2023, with the margin declining to 62.85%, effectively returning to levels observed at the beginning of the five-year period.
- International Market Performance
- International margins exhibited a steady upward trajectory between 2019 and 2022, increasing from 50.03% to 54.06%. This trend mirrored the U.S. market with a subsequent decline in 2023 to 52.08%. Despite this recent decrease, the international segment maintained a higher margin in 2023 than in both 2019 and 2020.
- Geographic Margin Variance
- A persistent disparity is observed between the two geographic areas. The U.S. market consistently maintains a higher profit margin than the international segment, with a variance ranging from approximately 8.9 to 12.6 percentage points. The narrowest gap between the two regions was recorded in 2022, coinciding with the peak margin values for both territories.
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Area Profit Margin: United States (U.S.)
Zoetis Inc.; United States (U.S.); area profit margin calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Earnings | 2,863) | 2,763) | 2,569) | 2,239) | 2,005) |
| Revenue | 4,555) | 4,313) | 4,042) | 3,557) | 3,203) |
| Area Profitability Ratio | |||||
| Area profit margin1 | 62.85% | 64.06% | 63.56% | 62.95% | 62.60% |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Area profit margin = 100 × Earnings ÷ Revenue
= 100 × 2,863 ÷ 4,555 = 62.85%
The U.S. geographic segment exhibited consistent expansion in both top-line and bottom-line performance between 2019 and 2023. Revenue grew steadily from 3,203 million US$ to 4,555 million US$, while earnings followed a similar upward trajectory, increasing from 2,005 million US$ to 2,863 million US$ over the five-year period.
- Revenue and Earnings Trajectory
- A sustained increase in revenue is observed annually, with significant growth occurring particularly between 2020 and 2021. Earnings mirrored this trend, growing consistently each year, although the pace of earnings growth decelerated in 2023 relative to the growth rates observed in the preceding years.
- Area Profit Margin Stability
- The profit margin remained remarkably stable throughout the period, fluctuating within a narrow range. A gradual upward trend was noted from 2019 to 2022, where the margin climbed from 62.60% to a peak of 64.06%, indicating an improvement in operational efficiency and cost management during that window.
- Recent Margin Performance
- A slight contraction in the profit margin occurred in 2023, with the figure declining to 62.85%. Despite this recent decrease, the margin remains above the 2019 level, suggesting that the segment maintains a robust capacity for profitability despite the slight year-over-year compression.
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Area Profit Margin: International
Zoetis Inc.; International; area profit margin calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Earnings | 2,037) | 1,990) | 1,948) | 1,547) | 1,487) |
| Revenue | 3,911) | 3,681) | 3,652) | 3,035) | 2,972) |
| Area Profitability Ratio | |||||
| Area profit margin1 | 52.08% | 54.06% | 53.34% | 50.97% | 50.03% |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Area profit margin = 100 × Earnings ÷ Revenue
= 100 × 2,037 ÷ 3,911 = 52.08%
The international segment exhibits a consistent growth trajectory in both top-line revenue and bottom-line earnings from 2019 through 2023. Revenue increased steadily from 2,972 million US dollars in 2019 to 3,911 million US dollars in 2023, while earnings grew from 1,487 million US dollars to 2,037 million US dollars over the same period. This concurrent growth indicates a scalable operational model within the international markets.
- Revenue and Earnings Trends
- A positive correlation is observed between revenue and earnings. The most significant year-over-year increase in both metrics occurred between 2020 and 2021, where revenue rose by approximately 20% and earnings increased by approximately 25.9%, suggesting a period of heightened operational efficiency or market expansion.
- Area Profit Margin Evolution
- The area profit margin demonstrated a sustained upward trend for four consecutive years, rising from 50.03% in 2019 to a peak of 54.06% in 2022. This expansion reflects an improvement in the conversion of revenue to profit within the international geography.
- Recent Margin Contraction
- A reversal in the margin trend is noted in 2023, with the area profit margin declining to 52.08% from the 2022 peak. Despite this contraction, the margin remains significantly higher than the 2019 and 2020 levels, and earnings continued to grow in absolute terms, suggesting that the margin compression did not offset the gains from increased revenue.
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Area Return on Assets (Area ROA)
Zoetis Inc., ROA by geographic area
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| United States (U.S.) | 136.85% | 151.81% | 156.84% | 150.67% | 149.40% |
| International | 183.18% | 213.29% | 248.47% | 216.06% | 248.66% |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
The geographic return on assets (ROA) for the period between 2019 and 2023 reveals a general contraction in asset efficiency across both the United States and International segments, following an initial period of stability and growth.
- United States Area ROA
- The U.S. market exhibited a period of moderate growth between 2019 and 2021, with the ROA increasing from 149.40% to a peak of 156.84%. Following this peak, a consistent downward trend emerged, with the ratio falling to 151.81% in 2022 and reaching its lowest point of 136.85% by the end of 2023. This indicates a decline in asset productivity in the domestic market during the latter two years of the analyzed period.
- International Area ROA
- The international segment consistently maintained a higher ROA than the U.S. market, although it experienced greater volatility. After an initial decline in 2020, the ratio recovered to 248.47% in 2021, nearly mirroring the 2019 level of 248.66%. However, a significant and sustained contraction occurred thereafter, with the ROA dropping to 213.29% in 2022 and further to 183.18% in 2023, reflecting a substantial reduction in the efficiency of international asset utilization.
- Comparative Geographic Performance
- A comparative analysis shows a narrowing gap in asset efficiency between the two regions. In 2019, the international ROA exceeded the U.S. ROA by 99.26 percentage points. By 2023, this differential decreased to 46.33 percentage points. While the international segment remains significantly more efficient per unit of asset, the rate of decline in the international market has been more aggressive than that of the United States.
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Area ROA: United States (U.S.)
Zoetis Inc.; United States (U.S.); area ROA calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Earnings | 2,863) | 2,763) | 2,569) | 2,239) | 2,005) |
| Property, plant and equipment, less accumulated depreciation | 2,092) | 1,820) | 1,638) | 1,486) | 1,342) |
| Area Profitability Ratio | |||||
| Area ROA1 | 136.85% | 151.81% | 156.84% | 150.67% | 149.40% |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Area ROA = 100 × Earnings ÷ Property, plant and equipment, less accumulated depreciation
= 100 × 2,863 ÷ 2,092 = 136.85%
Between 2019 and 2023, the U.S. operations exhibited a consistent increase in both absolute earnings and the asset base, although the efficiency of asset utilization shifted over the five-year period.
- Earnings Trend
- Earnings demonstrated steady year-over-year growth, rising from US$ 2,005 million in 2019 to US$ 2,863 million in 2023. The most pronounced acceleration occurred between 2020 and 2021, followed by a moderation in the growth rate through 2023.
- Asset Base Expansion
- Net property, plant, and equipment increased progressively from US$ 1,342 million in 2019 to US$ 2,092 million in 2023. This consistent upward trajectory indicates a sustained capital investment in the physical infrastructure of the U.S. region.
- Area Return on Assets (ROA) Analysis
- The Area ROA followed a non-linear trajectory, increasing from 149.40% in 2019 to a peak of 156.84% in 2021. Subsequently, a downward trend emerged, with the ratio declining to 151.81% in 2022 and further to 136.85% in 2023. This contraction indicates that the growth in the asset base began to outpace the growth in earnings in the final two years of the analyzed period, leading to a reduction in the relative profitability of the invested assets.
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Area ROA: International
Zoetis Inc.; International; area ROA calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Earnings | 2,037) | 1,990) | 1,948) | 1,547) | 1,487) |
| Property, plant and equipment, less accumulated depreciation | 1,112) | 933) | 784) | 716) | 598) |
| Area Profitability Ratio | |||||
| Area ROA1 | 183.18% | 213.29% | 248.47% | 216.06% | 248.66% |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Area ROA = 100 × Earnings ÷ Property, plant and equipment, less accumulated depreciation
= 100 × 2,037 ÷ 1,112 = 183.18%
The international operational segment demonstrates a consistent increase in earnings alongside a significant expansion of the asset base over the five-year period ending December 31, 2023.
- Earnings Growth
- Earnings have maintained a steady upward trajectory, increasing from US$ 1,487 million in 2019 to US$ 2,037 million in 2023. This growth indicates a sustained increase in absolute profitability within the international markets.
- Asset Expansion
- Property, plant, and equipment, net of accumulated depreciation, grew substantially from US$ 598 million in 2019 to US$ 1,112 million in 2023. This suggests an aggressive investment in physical infrastructure and capacity to support regional operations.
- Area Return on Assets (ROA) Performance
- The Area ROA shows a general downward trend, despite a temporary recovery in 2021. The ratio decreased from 248.66% in 2019 to 183.18% in 2023. This compression in ROA is a result of the asset base growing at a faster rate than the corresponding earnings growth, leading to a reduction in the efficiency of asset utilization relative to profit generation.
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Area Asset Turnover
Zoetis Inc., asset turnover by geographic area
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| United States (U.S.) | 2.18 | 2.37 | 2.47 | 2.39 | 2.39 |
| International | 3.52 | 3.95 | 4.66 | 4.24 | 4.97 |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
The analysis of geographic asset turnover indicates a general decline in efficiency regarding revenue generation relative to assets across both the United States and International segments over the five-year period ending December 31, 2023.
- United States (U.S.) Asset Turnover
- The U.S. market exhibited relative stability in asset utilization between 2019 and 2022, maintaining a ratio between 2.37 and 2.47. A peak was observed in 2021 at 2.47; however, a downward trend emerged thereafter, culminating in a period low of 2.18 in 2023. This represents a moderate contraction in the efficiency of U.S.-based assets.
- International Asset Turnover
- The International segment consistently maintained a higher asset turnover ratio than the U.S. market, although it experienced a more pronounced overall decline. From a peak of 4.97 in 2019, the ratio fell to 3.52 by 2023. While a temporary recovery to 4.66 occurred in 2021, the subsequent decline suggests a diminishing return on assets deployed in international markets.
- Comparative Geographic Efficiency
- A significant gap persists between the two regions, with international operations generating substantially more revenue per unit of asset than domestic operations. Nevertheless, the rate of decline in the International segment is more aggressive than that of the U.S. segment. Both regions converged toward lower efficiency levels in 2023, suggesting a systemic increase in the asset base or a slowing of revenue growth relative to investment across all geographic areas.
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Area Asset Turnover: United States (U.S.)
Zoetis Inc.; United States (U.S.); area asset turnover calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Revenue | 4,555) | 4,313) | 4,042) | 3,557) | 3,203) |
| Property, plant and equipment, less accumulated depreciation | 2,092) | 1,820) | 1,638) | 1,486) | 1,342) |
| Area Activity Ratio | |||||
| Area asset turnover1 | 2.18 | 2.37 | 2.47 | 2.39 | 2.39 |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Area asset turnover = Revenue ÷ Property, plant and equipment, less accumulated depreciation
= 4,555 ÷ 2,092 = 2.18
The financial data for the United States region demonstrates a consistent growth trajectory in revenue alongside a steady increase in capital investment. However, the relationship between revenue generation and fixed asset utilization has shifted over the five-year period ending December 31, 2023.
- Revenue Performance
- A continuous upward trend in revenue is observed, growing from US$ 3,203 million in 2019 to US$ 4,555 million in 2023. This represents a sustained expansion of the top line throughout the analyzed period.
- Capital Investment in Fixed Assets
- Net property, plant, and equipment (PPE) increased steadily every year, rising from US$ 1,342 million in 2019 to US$ 2,092 million in 2023. The most significant acceleration in asset growth occurred between 2022 and 2023, where PPE increased by approximately 14.9%.
- Area Asset Turnover Efficiency
- The area asset turnover ratio remained stable at 2.39 in 2019 and 2020, reaching a peak of 2.47 in 2021. Following this peak, a downward trend is observed, with the ratio declining to 2.37 in 2022 and further to 2.18 in 2023. This decline indicates that the rate of investment in fixed assets has outpaced the rate of revenue growth in the latter part of the period, leading to a reduction in the efficiency of those assets in generating sales.
In summary, while the U.S. operations have successfully scaled both revenue and physical capacity, the diminishing area asset turnover ratio suggests that recent capital expenditures have not yet yielded a proportional increase in revenue.
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Area Asset Turnover: International
Zoetis Inc.; International; area asset turnover calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Revenue | 3,911) | 3,681) | 3,652) | 3,035) | 2,972) |
| Property, plant and equipment, less accumulated depreciation | 1,112) | 933) | 784) | 716) | 598) |
| Area Activity Ratio | |||||
| Area asset turnover1 | 3.52 | 3.95 | 4.66 | 4.24 | 4.97 |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Area asset turnover = Revenue ÷ Property, plant and equipment, less accumulated depreciation
= 3,911 ÷ 1,112 = 3.52
Between 2019 and 2023, the international segment experienced consistent revenue growth, rising from US$ 2,972 million to US$ 3,911 million. During the same period, there was a substantial increase in property, plant, and equipment (PP&E), which rose from US$ 598 million to US$ 1,112 million. This indicates that capital investment in fixed assets grew at a significantly faster rate than the associated revenue, leading to a general decline in asset efficiency.
- Revenue Trends
- A steady upward trajectory in revenue is observed, with the most significant increase occurring between 2020 and 2021. The growth reflects a consistent expansion of the international top line over the five-year analysis period.
- Fixed Asset Investment
- Property, plant, and equipment, net of accumulated depreciation, increased every year without exception. The total growth in this asset class exceeded 85% from 2019 to 2023, suggesting an aggressive expansion of physical infrastructure and operational capacity in international markets.
- Area Asset Turnover Analysis
- The area asset turnover ratio transitioned from 4.97 in 2019 to 3.52 in 2023. While a brief recovery to 4.66 was noted in 2021, the overall trend is negative. The decrease in the ratio confirms that for every dollar invested in PP&E, the resulting revenue generation has diminished, which is characteristic of a period of heavy capital expenditure where the assets have not yet reached full productivity.
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Revenue
Zoetis Inc., revenue by geographic area
US$ in millions
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| United States (U.S.) | 4,555) | 4,313) | 4,042) | 3,557) | 3,203) |
| International | 3,911) | 3,681) | 3,652) | 3,035) | 2,972) |
| Total | 8,466) | 7,994) | 7,694) | 6,592) | 6,175) |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
Total revenue exhibited a consistent upward trajectory from 2019 to 2023, increasing from US$ 6,175 million to US$ 8,466 million. This represents an overall growth of approximately 37% over the five-year period, with a notable acceleration in total revenue during the 2021 fiscal year.
- United States Revenue Growth
- The U.S. market demonstrated steady and consistent year-over-year growth, rising from US$ 3,203 million in 2019 to US$ 4,555 million in 2023. The most significant expansion occurred between 2020 and 2021, while subsequent years showed a stabilization in growth rates, maintaining a positive trend through 2023.
- International Revenue Performance
- International revenue increased from US$ 2,972 million in 2019 to US$ 3,911 million in 2023. This segment displayed higher volatility compared to the domestic market, characterized by a substantial surge in 2021, followed by a period of relative stagnation in 2022 and a recovery in growth by 2023.
- Geographic Revenue Distribution
- The revenue mix indicates a gradual shift toward a higher concentration of sales within the United States. The U.S. contribution to total revenue increased from 51.9% in 2019 to 53.8% in 2023, confirming that the domestic market has served as the primary engine for total revenue expansion over the analyzed period.
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Earnings
Zoetis Inc., earnings by geographic area
US$ in millions
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| United States (U.S.) | 2,863) | 2,763) | 2,569) | 2,239) | 2,005) |
| International | 2,037) | 1,990) | 1,948) | 1,547) | 1,487) |
| Total | 4,900) | 4,753) | 4,517) | 3,786) | 3,492) |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
Total earnings exhibited a consistent upward trajectory from 2019 to 2023, rising from $3,492 million to $4,900 million. The most significant period of acceleration occurred between 2020 and 2021, while the latter part of the period was characterized by more moderate, steady growth.
- United States Market Performance
- Earnings within the U.S. grew steadily every year, increasing from $2,005 million in 2019 to $2,863 million in 2023. The highest year-over-year growth rate occurred between 2020 and 2021, followed by a deceleration in the growth rate through 2022 and 2023.
- International Market Performance
- International earnings increased from $1,487 million in 2019 to $2,037 million in 2023. A notable spike in earnings was observed in 2021, where figures rose to $1,948 million from $1,547 million the previous year. Growth in the international segment subsequently stabilized, showing marginal increases in 2022 and 2023.
- Geographic Contribution Analysis
- The U.S. market remained the primary driver of total earnings throughout the observed period. The U.S. contribution to total earnings was approximately 57.4% in 2019 and increased slightly to 58.4% by 2023, demonstrating a stable distribution of earnings between domestic and international operations.
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Property, plant and equipment, less accumulated depreciation
Zoetis Inc., property, plant and equipment, less accumulated depreciation by geographic area
US$ in millions
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| United States (U.S.) | 2,092) | 1,820) | 1,638) | 1,486) | 1,342) |
| International | 1,112) | 933) | 784) | 716) | 598) |
| Total | 3,204) | 2,753) | 2,422) | 2,202) | 1,940) |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
Net property, plant, and equipment across all geographic segments demonstrate a consistent upward trajectory between 2019 and 2023. Total net assets increased from 1,940 million US dollars to 3,204 million US dollars, representing a cumulative growth of approximately 65.2% over the five-year period.
- United States Asset Expansion
- The U.S. market maintains the largest share of net property, plant, and equipment, growing steadily from 1,342 million US dollars in 2019 to 2,092 million US dollars in 2023. This reflects a compound annual increase and a total growth of approximately 55.9%, indicating sustained domestic infrastructure investment.
- International Asset Acceleration
- International net assets exhibited a more aggressive growth rate compared to the domestic segment. Starting at 598 million US dollars in 2019, the international footprint expanded to 1,112 million US dollars by the end of 2023, marking an increase of approximately 86.0%.
- Geographic Distribution Shift
- A gradual shift in the distribution of net assets is observable. In 2019, the U.S. accounted for approximately 69.2% of the total net property, plant, and equipment, while international markets accounted for 30.8%. By 2023, the U.S. share decreased to approximately 65.3%, and the international share rose to 34.7%, suggesting a strategic pivot toward increasing global operational capacity.
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