Shares in pet drugs firm Animalcare slumped 21 per cent after the firm said 2018 earnings will fall below expectations.
The York-based firm warned that due to a changing sales mix and competitive pressures, earnings – whilst still significantly ahead of the previous year – will be below market expectations for 2018.
The company said it expects to deliver incremental growth in 2018 earnings against its 2017 results, maintaining at least double digit growth.
The group’s shares fell 57p to 209p.
Analyst Mike Mitchell, at Panmure Gordon, said: “Animalcare has released a trading update in anticipation of prelims due in May, reiterating its commentary for 2017 but with revised guidance on 2018.
“On this basis, we make revisions to revenues (marginally increasing 2018 and 2019 top-line) while lowering our estimates for gross margins to reflect sales mix and current competitive pressures.
“The net impact of this is to effectively shift our anticipated adjusted EBITDA estimate of £15.2m from 2018 into 2019.
“While this is disappointing, our numbers still see the company set on delivering double digit EBITDA growth in 2018 and 2019 on the enlarged pan-European platform.“
Animalcare said sales growth is expected to be stronger across the group in 2018 as it transforms itself into a global company following the acquisition of Ecuphar last July.
The firm said 2017 revenues will show a year-on-year increase of around 9.5 per cent to £92m, slightly ahead of management expectations.
It added that earnings for 2017 will be broadly in line with management expectations.
Chris Cardon, CEO of Animalcare, said: “As a board we are focused on building long-term shareholder value through continued strong cash generation, which enables us to invest in further growth via new product development, as well as maintaining our current dividend policy.
“We remain confident of the strategic rationale of a leading Pan-European animal-health business and the long-term share value that will come with it.”
Animalcare said it is focused on building shareholder value in the long term by delivering strong cash generation, enabling the group to invest in future growth.
It will also continue paying out dividends and said that cash generation and the group’s strong balance sheet allows the current dividend policy to be maintained whilst continuing to invest in new product development.
The firm said it has a clear strategy for growth through an enhanced geographic footprint and sales, marketing and distribution network, and a strong product development pipeline.
It said that further synergies and cross-selling opportunities will start to take effect this year.