Constant-Currency Growth: What Virbac's 7.4% Really Means

Virbac reported a strong first half last week, but the headline growth rate depends on which version of revenue growth you choose to read. Revenue increased 7.4% at constant exchange rates and scope, while reported growth at actual exchange rates was only 4.0%. Both figures describe the same business over the same period, yet they answer different questions.

That distinction matters for investors because adjusted growth measures can make operating momentum easier to see when currencies move sharply. They can also become misleading when the adjustment is treated as somehow more real than the financial statements. Virbac provides a useful example of why the best analysis usually keeps both numbers on the table.

What constant-currency growth is trying to remove

Virbac generated €768 million of revenue in the first half of 2026 compared with €738.3 million a year earlier. On the figures translated into euros, that was growth of 4.0%. In its September 17 half-year results, however, Virbac also reported growth of 7.4% at constant exchange rates and scope.

The difference exists because Virbac sells products across many countries while reporting its consolidated accounts in euros. Revenue generated in another currency has to be translated back into euros. If those currencies weaken against the euro, the translated revenue can grow more slowly even when the local business is selling more products or charging higher prices.

Constant-currency analysis attempts to remove that translation effect by comparing both periods using the same exchange rates. In Virbac's case, it reveals stronger underlying commercial momentum than the reported 4.0% growth rate suggests.

Management provided some useful detail underneath the adjustment. Volume and mix contributed approximately 5.4 percentage points of growth, while price increases contributed roughly another 2 points. Companion-animal revenue increased 10.0% at constant exchange rates and scope, while farm-animal revenue increased 6.7%.

Those figures tell us more about what customers were actually buying than the reported euro growth rate alone.

Reported growth still matters

It would be tempting to conclude that the 7.4% number is the important one and the 4.0% figure is merely accounting noise. That goes too far. Currency translation may not describe operating demand, but shareholders ultimately own a business that reports earnings, assets and cash flows in euros.

If unfavorable currency movements persist, their effect does not disappear simply because management presents a constant-currency comparison. Revenues earned abroad eventually have to contribute to consolidated profits and cash flows. Exchange rates can affect translated earnings, purchasing power, input costs, pricing decisions and the value of cash generated in foreign markets.

Constant-currency growth is therefore best viewed as an analytical bridge. It helps investors separate changes in the underlying business from changes caused by currency translation. It does not replace the reported accounts.

This is a broader principle in fundamental analysis. Adjusted measures are most useful when they isolate a specific economic question. They become less useful when the adjustment causes us to forget that the excluded factor still has financial consequences.

Even the word organic needs a definition

There is another useful wrinkle in Virbac's reporting. The company refers to growth at constant exchange rates and scope as organic growth, which normally aims to remove both currency effects and meaningful changes in the consolidation perimeter caused by acquisitions or disposals.

Virbac also explains that Thyronorm, an acquired business, is included in its 2026 organic perimeter because the acquisition is considered insufficiently material to remove from constant-scope growth. The company estimates that Thyronorm will contribute roughly one percentage point to full-year revenue growth.

There is nothing improper about that treatment. It does demonstrate why investors should read the definition behind an adjusted metric rather than relying on the label. Two companies can both report “organic growth” while applying somewhat different materiality thresholds and perimeter rules.

The analytical question is not whether the company is allowed to use the term. It is what economic effects have actually been removed from the number, and which ones remain inside it.

The longer-term growth picture is more moderate

The current MOATEY evidence provides another useful time horizon. MOATEY's five-year revenue growth measure for Virbac is 6.99%, compared with the company's current first-half constant-currency growth of 7.4%. MOATEY also shows an 11.0% five-year free-cash-flow growth measure and a considerably lower 3.77% earnings growth measure.

These are MOATEY framework values and should not automatically be interpreted as raw figures reported by Virbac. Values used by MOATEY may or may not have been subject to proprietary adjustments as part of the framework's company evaluation and determination of ratings and classifications.

The relationship between the numbers is more useful than any single one of them. Revenue development has been reasonably consistent over the longer term, while free cash flow has grown faster and earnings growth has been more subdued. MOATEY therefore gives Virbac 5.9 of 15 available Growth points rather than treating one strong half-year organic growth figure as sufficient evidence of exceptional long-term growth.

That is an important distinction. A six-month result describes recent momentum. A five-year measure describes a much broader economic path. Neither should automatically replace the other.

Margins help test the quality of the growth

Virbac's latest results also show why revenue growth should be connected to profitability. Adjusted EBIT before acquisition-related amortization increased to €144.2 million, and the adjusted margin improved from 18.3% to 18.8%. Net income increased 5.9% to €87.1 million.

This matters because a company growing largely through heavy discounting would deserve a different interpretation from one growing volume while maintaining or improving its economics. Virbac said the stronger margin benefited from a favorable sales mix, partly offset by higher operating expenses.

At the same time, net debt increased from €173 million at the end of December to €196 million at the end of June, which management attributed mainly to normal working-capital seasonality. The company continues to expect roughly €80 million of cash generation for the full year after approximately €125 million of capital expenditure. 1

Taken together, the results provide a more useful picture than the 7.4% growth rate alone. Underlying sales momentum appears healthy, margins improved, earnings grew and the company continues to invest. Currency translation reduced the reported growth rate, while cash generation and working capital add further context.

How to read constant-currency growth in practice

When a multinational company reports a large gap between constant-currency and reported growth, the first step is simply to identify the source of the difference. Currency may explain it, but acquisitions, disposals or changes in reporting scope can also be involved. The company's reconciliation usually matters more than the headline adjective attached to the growth rate.

Then separate volume, pricing and mix where the information is available. Growth produced mainly by higher prices can have different implications from growth produced by rising unit demand. Stronger product mix can improve revenue and margins without requiring the same increase in physical volume.

Next, connect revenue growth to earnings and free cash flow. A constant-currency revenue number can reveal healthy operating momentum, but it cannot tell you whether the additional sales are producing attractive incremental economics. That requires looking further down the financial statements.

Finally, return to the reported figures. Investors should understand what the business might have looked like without currency movements, but they should not forget what actually arrived in the consolidated accounts.

Virbac's first-half results illustrate the balance well. The 7.4% constant-currency figure tells us that the underlying commercial business grew faster than the reported euro number suggests. The 4.0% reported figure tells us what shareholders actually see after translation. Neither number invalidates the other.

The better habit is not choosing the growth rate you prefer. It is understanding why the rates differ, what each one reveals, and whether the broader economics support the story they appear to tell.