Animalcare investment pays off

The York-based firm reported a “very strong” first half, which it said was ahead of the board’s expectations.

The group said revenue at its vet drugs division jumped 17 per cent to £4.6m in the six months to December 31, driven by strong domestic and export like-for-like growth of 13 per cent and a 4 per cent contribution from sales of four new products. The export business is doing particularly well with revenues leaping 38 per cent.

​Chris Brewster, the group’s chief financial officer, said: “Animalcare is confident to invest in the business. We are investing in people, building the sales team and product people.

“At the time of the referendum, we decided the right thing to do is to bring new people into the business. That was justified. Brexit didn’t change that. It was business as usual.”

T​he group reported record sales and profits in the last six months of 2016. Revenue rose 12​ per cent to​ ​£8m​, up from £7.1m.

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 expect​s​ ​to launch another four products in the second half. These will include another product in the ear range and an intravenous fluid product.

​CEO Iain Menneer said: “We are going to launch intravenous fluids outside the UK. It’s a completely new market for our fluids.”

Despite the group’s strong export sales, it is a net importer so it suffered some currency headwinds, but margins improved as a result of a better sales mix and cost of goods initiatives.

A​nalyst Mike Mi​tchell at Panmure Gordon said: “Animalcare’s interim results show how the group’s focus on areas such as product development and international sales are translating through to growth in both the top and bottom-line.

“The consistency of delivery is what impresses us, reflecting the maturity of the management team and the clarity of the long-term vision. We repeat our ‘buy’ recommendation.”

Dr Mitchell added that Animalcare is becoming a more mature business with the internal infrastructure to support the next stages of development.

“The ability to drive commercial growth alongside a central product pipeline programme – while also supporting the payment of a dividend – is an unusual set of characteristics to see in a small company,” he said.

“We consider this reflects well on management and the board and look forward to further updates as investment in products translates into commercial launches and revenue expansion.”

​The group is increasing its interim dividend by 11 per cent to 2.0​p per share​, reflecting confidence in ​its​ growth prospects​.

Mr Brewster said: “We try to get the right balance between the dividend increase and investment. The dividend increase is below the growth in operating profit and reflects that balance.

“As we grow profits, we’ll increase the dividend. The intention is bring some novel products to market.”

Operating profit rose 24 per cent to £1.85m.