ZTS · 10-Q · 2026Q2 · Full report

Operating Expense Trends

Zoetis Inc. · 2026-08-06 · Importance 31 · Surprise 32 · No source text

Six-month SG&A expense decreased 1%, or $8 million, primarily because of lower depreciation, lower certain significant items and lower charitable contributions. Six-month R&D expense increased 8%, or $25 million, due to higher project investments, compensation costs supporting innovation and portfolio progression, and unfavorable foreign exchange. In the second quarter, SG&A declined 4%, or $22 million, while R&D increased 4%, or $7 million.

Key facts

• SG&A expenses decreased by $22 million, or 4%, in the three months ended June 30, 2026 compared with the three months ended June 30, 2025, primarily due to lower compensation-related costs, lower charitable contributions, lower certain significant items, and lower depreciation expense, partially offset by unfavorable foreign exchange and higher professional and consulting expense. source
• SG&A expenses decreased by $8 million, or 1%, in the six months ended June 30, 2026 compared with the six months ended June 30, 2025, primarily due to lower depreciation expense, lower certain significant items and lower charitable contributions, partially offset by unfavorable foreign exchange and an increase in professional and consulting expense. source
• Selling, general and administrative expenses were $1,180 million for the six months ended June 30, 2026. source
• Research and development expenses increased by $25 million, or 8%, in the six months ended June 30, 2026 versus the six months ended June 30, 2025, primarily due to higher spend in project investments, increased compensation-related costs and unfavorable foreign exchange. source
• Research and development expenses increased by $7 million, or 4%, in the three months ended June 30, 2026 versus the three months ended June 30, 2025, primarily due to higher spend in project investments and an increase in compensation-related costs. source
• Other unallocated expenses decreased by $25 million, or 16%, in the six months ended June 30, 2026 compared with the six months ended June 30, 2025, primarily due to lower manufacturing costs and other charges, as well as lower inventory obsolescence, partially offset by unfavorable foreign exchange and freight charges. source
• Other (income)/deductions—net changed to $(5) million for the three months ended June 30, 2026 versus $(25) million in the comparable prior year period, primarily as a result of asset impairment charges in the prior year period, partially offset by lower interest income in the current period. source
• Other (income)/deductions—net for the six months ended June 30, 2026 was $(25) million versus $(13) million in the six months ended June 30, 2025, primarily as a result of lower foreign currency losses and the gain on sale of a distribution facility in the current period, as well as asset impairment charges in the prior year period, partially offset by lower interest income in the current period. source

Impact estimates