ZTS · 10-Q · 2026Q3 · Full report

Gross Margin Drivers

Zoetis Inc. · 2026-11-05 · Importance 18 · Surprise 14

Consolidated cost of sales rose to 29.2% of revenue in the third quarter of 2026 from 28.8% a year earlier, and to 28.3% for the first nine months from 27.9%. Third-quarter margin pressure reflected higher inventory charges, lower net price realization, and unfavorable product mix, partly offset by prior-tariff refunds and favorable foreign exchange. Nine-month pressure reflected unfavorable foreign exchange and product mix, partly offset by favorable manufacturing and other costs and tariff refunds; U.S. gross margin fell to 82.5% from 83.7%, while International gross margin increased to 70.3% from 69.5%.

Key facts

• Zoetis’ cost of sales was 29.2% of revenue in the third quarter of 2026, versus 28.8% in the third quarter of 2025; the increase reflected higher inventory charges, lower net price realization and unfavorable product mix, partly offset by prior-tariff refunds and favorable FX. source
• Zoetis’ cost of sales was 28.3% of revenue in the first nine months of 2026, versus 27.9% in the comparable 2025 period; unfavorable FX and product mix were partly offset by favorable manufacturing and other costs and prior-tariff refunds. source