Animalcare cheers strong growth

Pet drugs firm Animalcare has reported good revenue growth since the acquisition of Belgian firm Ecuphar last July with like-for-like revenue sales up 11 per cent in 2017.
Animalcare makes drugs for domestic animalsAnimalcare makes drugs for domestic animals
Animalcare makes drugs for domestic animals

The York-based firm said the integration is progressing as anticipated, but it is still at an early stage and 2017 margins have yet to reflect the synergies that it expects to realise in the medium to long term.

Animalcare ​is looking to expand beyond Europe​ and transform itself into a global company following the acquisition of Ecuphar. The group has seen strong demand from overseas markets.

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Until last July, Animalcare was focused solely on Europe, but following its ​“truly transformational” takeover of ​Ecuphar​, ​it is setting its sights further afield.

Animalcare is now launching products into new territories such as Hong Kong, Taiwan, Singapore and Saudi Arabia.

The group's finance director Chris Brewster said the Ecuphar deal will enable the firm to trade overseas whatever happens with the Brexit negotiations.

"The transaction with Ecuphar is very helpful. After Brexit we will have to have a legal entity within Europe. It wasn't the reason for the Ecuphar deal, but it's a fortuitous side effect," he said.

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"It's a great deal because of the synergy between the two companies. Ecuphar had no sales in the UK before the deal. The R&D team in York have great skills and so does the R&D team in Barcelona."

In a trading update, Animalcare said total revenue for the 12 months to December 31 rose 9.5 per cent at an annual equivalent rate to £92m, slightly ahead of management expectations.

Excluding Nutriscience, which Ecuphar sold in October 2016, like-for-like revenues increased by 11 per cent at an annual equivalent rate.

The group said earnings are expected to be broadly in line with management expectations.

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Animalcare's CEO Chris Cardon said; "The board is pleased with the good revenue growth of the enlarged group.

"The process to integrate the businesses to create a leading pan-European Animal Health platform is underway. Whilst this process will take some time, the board remains confident of the strategic rationale for the merger and the prospect of future value creation for our shareholders."

Analyst Mike Mitchell at Panmure Gordon said: "An update on the post-acquisition period of Ecuphar and Animalcare sees the integration process moving ahead, naturally highlighting the early stage of what will be a continued process as the enlarged group delivers synergies, translating to margins, over the medium to long term.

"The acquisition of Ecuphar positions the enlarged business with a major opportunity to drive growth via an expanded platform with a significantly enhanced geographical presence in Europe and a strengthened product development pipeline.

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"The management team and board have also been expanded with experienced individuals who have a track record of business development and bring, in our view, a new focus towards entrepreneurial business creation.

"While there will be much to do in terms of integration over a transition period of circa 12 to 18 months, we view the transaction as being an important step forward in Animalcare’s ongoing and future development."

Animalcare expects to announce its preliminary financial results on May 15, allowing for the additional time to report on the reverse-acquisition of Ecuphar.

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