US and China struggles drag on Eco Animal Health

(Sharecast News) - Eco Animal Health reported a "challenging" first half on Monday, reporting sales of £28.7m, down from a restated £30.0m in the first half of 2018.
The AIM-traded firm said EBITDA for the six months ended 30 September stood at £2.7m, down from £6.4m, while profit before tax was £1.0m, falling from £5.3m.

Profit after taxa was £1.1m, falling from £4.6m, while earnings per share slid to 1.51p from 5.61p.

Cash generated by operations totalled £0.7m for the period, slipping from £5.8m, while net cash at period end stood at £13.4m, down from £23.8m.

On the operational front, Eco Animal Health said the African swine fever outbreak had "materially impacted" the volume of business it experienced in China, while geopolitical trade relations between China and the United States impacted its gross margins in the US.

It said it saw "strong" revenue growth of 45% to £19.4m outside of China and North America, particularly coming from Brazil and Mexico, with continued expansion in south and south east Asia.

The company noted the new marketing authorisation from the European Medicines Agency for the use of 'Aivlosin' 625 mg/g water soluble granules in breeding chickens.

It also said it had two worldwide exclusive novel poultry vaccine licensing deals with the Pirbright Institute in the UK.

The board said it was seeing improving market conditions at the beginning of the second half of the 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 exports and prices in North America improve," said non-executive chairman Andrew Jones.

"Our investments in research and development to generate future products and growth continue to progress as planned.

"The board has made significant progress in reviewing its accounting policies; we believe that we have identified all material prior period errors and we have corrected them in this Interim report."

Jones said the review and audit would conclude with the publication of the annual report in March.

"The directors remain confident and excited about the improving market conditions and future prospects for the business."

At 1029 GMT, shares in Eco Animal Health were down 6.23% at 201.6p.