Efforts to focus on selling its high-margin products have been paying off for Eco Animal Health (EAH), ensuring that profits outpace its rising revenues. The group posted record results, thanks to the growth of Aivlosin, its patented antibiotic used for treating disease in pigs and poultry.
Sales of the drug grew strongly across most of the group’s geographies, with the US growing most with a 33 per cent increase at fixed currencies. This is due to the Center for Veterinary Medicine approving the drug’s use in cases of swine respiratory disease in late July, combined with growth in the soluble granule formulation of Aivlosin used to treat pigs suffering from diseases of the gut.
China also pushed ahead, despite a lower pork price. But the group suffered in Latin America, due to weak economic conditions and slow regulatory responses. At least sales in Mexico were “very strong”, helped by the approval of Aivlosin for medicating drinking water to treat infected poultry laying eggs for human consumption.
The second half of the year looks to have started well, with management reporting a “strong and growing order book”. This prompted analysts at Peel Hunt to increase forecasts for the year to March 2018. They are now forecasting adjusted pre tax profit of £19m, giving EPS of 23.8p (up from £17.5m and 21.9p in FY2017).
| ECO ANIMAL HEALTH (EAH) | ||||
| ORD PRICE: | 563p | MARKET VALUE: | £370m | |
| TOUCH: | 550-575p | 12-MONTH HIGH: | 680p | LOW: 500p |
| DIVIDEND YIELD: | 1.4% | PE RATIO: | 33 | |
| NET ASSET VALUE: | 153p* | NET CASH: | £20.3m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 26.9 | 5.31 | 5.68 | 2.50 |
| 2017 | 29.2 | 5.86 | 6.39 | 3.20 |
| % change | +8 | +10 | +13 | +28 |
| Ex-div: | 22 Mar | |||
| Payment: | 12 Apr | |||
| *Includes intangible assets of £56m, or 85p a share | ||||
