Pet drugs firm Animalcare said that following a very strong first half, it expects trading for the year to June 2017 to be ahead of market expectations.
The York-based firm said that despite the uncertainty of Brexit, the board took the decision to accelerate investment in new products and this has paid off.
The group said that trading during the last six months of 2016 was ahead of expectations, both in sales and profit. It reported revenue growth of 12 per cent to £8m, up from £7.1m.
It said that its Licensed Veterinary Medicines division continued to grow strongly in the first half with revenues rising 17 per cent to £5.4m, driven by UK growth of 15 per cent and overseas growth of 38 per cent.
Gross margins improved through a combination of favourable sales mix and cost initiatives.
Sales from the Animal Welfare Products division rose 13 per cent to £1.5m.
The Companion Animal Identification division saw a 9 per cent fall in revenue to £1.1m.
Animalcare’s CEO Iain Menneer said: “Following the implementation of compulsory micro-chipping of dogs in the United Kingdom in April 2016, we expected and have observed a reduction in microchip volumes, which we expect to last into the medium-term. Database services however have continued to grow.“
Four products were launched in the first half - three as part of a range of ear cleaners and treatments and one new product from its in-house development pipeline, Acecare (a pet sedative). It expects to launch another two products in the second half.
Analyst Mike Mitchell at Panmure Gordon said: “A positive first half trading update from Animalcare sees continued momentum building within the business, with strong trading for the first six months.
“Second half revenues are anticipated to be in-line with the strong first-half performance, indicating an expected £15.9m top-line performance versus our previous £15.1m expectation.
“Our confidence in the company’s continued progress is reflected in our new target price of 385p. We remain buyers.”