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(Alliance News) - ECO Animal Health Group PLC on Tuesday deferred on the payment of a dividend, following a challenging first half caused by difficult trading conditions.
For the six months to the end of September, the animal health drugmaker reported a pretax profit of GBP1.0 million, down 81% from GBP5.3 million the year before.
This was on revenue that declined by 4% to GBP28.7 million from GBP30.0 million, mainly driven by weaker performances in China and North America.
For China, revenue declined by 53% to GBP5.6 million. ECO attributed this to the impact of African Swine Fever in the country, leading to a sharp drop in the population of Chinese pigs.
There was also the uncertainty caused by the ongoing trade war between the US and China.
Meanwhile in the US, revenue dropped by 21% to GBP3.7 million, as increased pork production numbers and the loss of Chinese exports led to an excess of pork supply.
This meant that substantial discounts had to be made to major pork producers in order to retain existing business, leading to a reduction in average gross margins in the period to 43% from 49%.
ECO deferred the payment of an interim dividend, citing "due regard" to its operating cash flow, investment in a new product pipeline and its current trading conditions.
For the same period the year before, ECO made a 4.0 pence per share payout.
Looking ahead, ECO said that easing trade tensions between China and the US could mean improved industry margins for the company, leading to the reduction of discount programmes in 2020.
Although the company remains uncertain on whether the poor trading conditions will improve going forward, it expects to report a significantly stronger second half of its financial year.
"We have had a challenging start to the first half of the year, but we now see signs that point to improved performance in the second half due to encouraging signs of early recovery in China as key producers build sow numbers and pork export and prices in North America improve. Our investments in R&D to generate future products and growth continue to progress as planned," said Chair Andrew Jones.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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