Zoetis Inc.ZTS
Zoetis Inc. Segments Disclosure
19. Segment Information
A. Segment Information
We manage our operations through two geographic regions. Each operating segment has responsibility for its commercial activities. Within each of these operating segments, we offer a diversified product portfolio, including parasiticides, vaccines, dermatology, anti-infectives, pain and sedation, other pharmaceutical and animal health diagnostics, for both companion animal and livestock customers.
On October 31, 2024, we completed the divestiture of our medicated feed additive product portfolio, certain water soluble products and related assets, and, as a result, our major product categories no longer include the category of medicated feed additives. See Note 5. Acquisitions and Divestitures.
Operating Segments
Our operating segments are the U.S. and International. The chief operating decision maker (CODM), our Chief Executive Officer and Chief Financial Officer, uses the information provided to compare segment performance with segment resource requests and allocates human and capital resources based on segment’s actual results and expected future results.
Other Costs and Business Activities
Certain costs are not allocated to our operating segment results, such as costs associated with the following:
• Other business activities, includes our CSS contract manufacturing results, our human health business, and expenses associated with our dedicated veterinary medicine research and development organization, research alliances, U.S. regulatory affairs and other operations focused on the development of our products. Other R&D-related costs associated with non-U.S. market and regulatory activities are generally included in the international commercial segment.
• Corporate, includes enabling functions such as information technology, facilities, legal, finance, human resources, business development, certain diagnostic costs and communications, among others. These costs also include certain compensation costs, certain procurement costs and other miscellaneous operating expenses not charged to our operating segments, as well as interest income and expense.
• Certain transactions and events such as (i) Purchase accounting adjustments, where we incur expenses associated with the amortization of fair value adjustments to inventory, intangible assets and property, plant and equipment; (ii) Acquisition and divestiture-related activities, where we incur costs associated with acquiring and integrating newly acquired businesses, such as transaction costs and integration costs as well as divestiture-related costs; and (iii) Certain significant items, which comprise substantive, unusual items that, either as a result of their nature or size, would not be expected to occur as part of our normal business on a regular basis, such as restructuring charges and implementation costs associated with our cost-reduction/productivity initiatives that are not associated with an acquisition, certain asset impairment charges, certain legal and commercial settlements and the impact of divestiture-related gains and losses.
•Other unallocated includes (i) certain overhead expenses associated with our global manufacturing operations not charged to our operating segments; (ii) certain costs associated with finance that specifically support our global manufacturing operations; (iii) certain supply chain and global logistics costs; and (iv) certain procurement costs.
Segment Assets
We manage our assets on a total company basis, not by operating segment. Therefore, our CODM does not regularly review any asset information by operating segment and, accordingly, we do not report asset information by operating segment. Total assets were approximately $15.5 billion and $14.2 billion at December 31, 2025 and 2024, respectively.
Selected Statement of Income Information
| Earnings | Depreciation and Amortization(a) | |||||||||||||||||||||||||||||||||||||
| Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||||||||||||||
| (MILLIONS OF DOLLARS) | 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||
| U.S. | ||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 5,097 | $ | 5,074 | $ | 4,555 | ||||||||||||||||||||||||||||||||
| Cost of Sales | 842 | 936 | 900 | |||||||||||||||||||||||||||||||||||
| Gross Profit | 4,255 | 4,138 | 3,655 | |||||||||||||||||||||||||||||||||||
| Gross Margin | 83.5 | % | 81.6 | % | 80.2 | % | ||||||||||||||||||||||||||||||||
Operating expenses(b) | 817 | 805 | 786 | |||||||||||||||||||||||||||||||||||
| Other (income)/deductions-net | — | (3) | 6 | |||||||||||||||||||||||||||||||||||
| U.S. Earnings | 3,438 | 3,336 | 2,863 | $ | 93 | $ | 85 | $ | 80 | |||||||||||||||||||||||||||||
| International | ||||||||||||||||||||||||||||||||||||||
Revenue(c) | 4,254 | 4,102 | 3,911 | |||||||||||||||||||||||||||||||||||
| Cost of Sales | 1,312 | 1,312 | 1,234 | |||||||||||||||||||||||||||||||||||
| Gross Profit | 2,942 | 2,790 | 2,677 | |||||||||||||||||||||||||||||||||||
| Gross Margin | 69.2 | % | 68.0 | % | 68.4 | % | ||||||||||||||||||||||||||||||||
Operating expenses(b) | 677 | 671 | 638 | |||||||||||||||||||||||||||||||||||
| Other (income)/deductions-net | 1 | 1 | 2 | |||||||||||||||||||||||||||||||||||
| International Earnings | 2,264 | 2,118 | 2,037 | 100 | 96 | 92 | ||||||||||||||||||||||||||||||||
| Total operating segments | 5,702 | 5,454 | 4,900 | 193 | 181 | 172 | ||||||||||||||||||||||||||||||||
Other business activities | (562) | (562) | (496) | 51 | 43 | 33 | ||||||||||||||||||||||||||||||||
| Reconciling Items: | ||||||||||||||||||||||||||||||||||||||
Corporate | (1,240) | (1,213) | (1,042) | 110 | 128 | 128 | ||||||||||||||||||||||||||||||||
Purchase accounting adjustments | (128) | (140) | (159) | 128 | 140 | 153 | ||||||||||||||||||||||||||||||||
Acquisition and divestiture-related costs | (2) | (18) | (9) | — | — | — | ||||||||||||||||||||||||||||||||
Certain significant items(d) | (82) | (79) | 33 | — | — | — | ||||||||||||||||||||||||||||||||
Other unallocated | (328) | (309) | (291) | 5 | 5 | 5 | ||||||||||||||||||||||||||||||||
Total Earnings(e) | $ | 3,360 | $ | 3,133 | $ | 2,936 | $ | 487 | $ | 497 | $ | 491 | ||||||||||||||||||||||||||
(a) Certain production facilities are shared. Depreciation and amortization is allocated to the reportable operating segments based on estimates of where the benefits of the related assets are realized.
(b) Operating expenses primarily consisted of field selling, other marketing expenses, advertising and promotions, and freight and logistics costs.
(c) Revenue denominated in euros was $998 million in 2025, $937 million in 2024 and $853 million in 2023.
(d) For 2025, certain significant items primarily consisted of costs related to a transition from internal to external innovation and manufacturing of certain products and the closure of a related site, costs related to our multi-year business process transformation program, which includes the implementation of a new enterprise resource planning (ERP) system, related digital technology solutions and other related costs, as well as employee termination costs related to organizational structure refinements.
For 2024, certain significant items primarily consisted of employee termination costs related to organizational structure refinements, a net loss related to the sale
of our medicated feed additive product portfolio, certain water soluble products and related assets, as well as asset impairment charges related to our aquaculture business, partially offset by a reversal of certain employee termination costs as a result of a change in strategy from our 2015 operational efficiency initiative.
For 2023, certain significant items primarily consisted of a gain on the sale of a majority interest in our pet insurance business of $101 million, partially offset by employee termination and exit costs related to organizational structure refinements of $43 million and certain asset impairment charges primarily related to our precision animal health and diagnostics businesses of $24 million.
(e) Defined as income before provision for taxes on income.
B. Geographic Information
Property, plant and equipment, less accumulated depreciation, by geographic region follow:
| As of December 31, | ||||||||||||||
| (MILLIONS OF DOLLARS) | 2025 | 2024 | ||||||||||||
| U.S. | $ | 2,456 | $ | 2,249 | ||||||||||
| International | 1,225 | 1,142 | ||||||||||||
| Property, plant and equipment, less accumulated depreciation | $ | 3,681 | $ | 3,391 | ||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 12, 2026 | Showing above |
| 2024 | Feb 13, 2025 | |
| 2023 | Feb 13, 2024 | |
| 2022 | Feb 14, 2023 | |
| 2021 | Feb 15, 2022 | |
| 2020 | Feb 16, 2021 | |
| 2019 | Feb 13, 2020 | |
| 2018 | Feb 14, 2019 | |
| 2017 | Feb 15, 2018 | |
| 2016 | Feb 16, 2017 | |
| 2015 | Feb 24, 2016 | |
About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.