Animalcare (AIM: ANCR), the supplier of pharmaceutical and other premium products and services to the veterinary industry, announces the following trading update.
As stated in the interim results reported in February 2012, trading performance from continuing operations for the financial year ended 30 June 2012, was expected to be more second half weighted than in prior years.
As previously indicated, reduced consumer confidence in general along with changes in distribution and service agreements is significantly impacting the Group's companion animal identification business. Year-to-date sales performance in this area of the Group's business is approximately 32% below that of the comparable period and has not shown the anticipated recovery. We expect that sales in this area will remain subdued for the rest of the current financial year.
The core veterinary medicines business has continued to perform in line with our expectations and revenue to April is approximately 4% above last year. Removing the effect of the temporary supply disruption of Buprecare ampoules, the progression in veterinary medicines is approximately 15% above last year. We expect this performance to continue to the end of the financial year. As reported, the Buprecare ampoule supply issues have been addressed and we expect that sale of ampoules will resume in the next year.
Despite the continued focus on cost control, the impact of the weak revenue trend in companion animal identification means that profit before tax is now expected to be materially below market expectations. Second half pre-tax profit is now expected to be similar to the first-half.
Looking beyond the current financial year, the Board remains confident of the Group's outlook. We are not anticipating any near term major recovery in sales of identification microchips and associated services but have implemented new database initiatives that we expect to positively impact the segment, as well as measures to improve gross margin durably. Strong progress continues to be made in veterinary medicines, with our target of four new product launches expected to be achieved during the course of 2013 as well as the planned resumption of sales of Buprecare ampoules.
These initiatives, when combined with our new product launches, are expected to lift the growth rate of the business during 2013 back to the levels recently enjoyed. The Group remains debt free and continues to generate positive operating cashflows with cash in line with management expectations.
Full year results for the year ending 30 June 2012 will be announced in September 2012.
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