Animalcare Group: Sales Down But Profitability Up
Edison | Jan 25, 2015 03:33AM ET
Companion animals are good for the company
Animalcare Group's (LONDON:ANCR) trading update confirms it is performing as we expected. The 7.2% rise (y-o-y) in group revenues was driven by a 10.6% increase in Licensed Veterinary Medicines. Three new product introductions are planned for H215. Companion Animal Identification revenues were up 5.0%, while the continuing streamlining of the Animal Welfare portfolio saw revenues drop 1%, but profitability was increased slightly. Cash generation remains strong, with cash of c £5.0m at December 2014. Our DCF valuation remains essentially unchanged at £41.9m (201p a share), against our previous £41.5m (198p a share).
Licensed Veterinary Medicines sales up 10.6%
Licensed Veterinary Medicines benefited from solid organic growth coupled with a non-recurring boost in Buprecare sales as a competitor suffered from supply problems. Buprecare’s high gross margin suggests H115 profit will benefit from the event, although this will not be sustained into H215. Animalcare is planning to launch a further three new products, sourced from its European development partners, during H215. Phasing of spend on new product development will be skewed towards the end of the financial year (and beyond).
Companion Animal Identification grew by 5.0%
Companion Animal Identification continues to benefit from the new technology platform and focused marketing efforts with sales up 5.0% over H114. Promotions based on the 25th anniversary of the Identichip launch have been well received. The introduction of compulsory dog chipping in England in April 2016 remains Defra’s goal and Animalcare’s preparations are underway. The Welsh timetable has slipped to an as yet undecided date; it was due in March 2015.
Animal Welfare sales down but profitability up
The phased withdrawal from a number of non-core and less profitable lines has continued and saw revenues down 1% over the period. However, as seen in the previous year, Animal Welfare’s gross profitability increased slightly.
Valuation: Maintained at £41.9m (201p a share)
The planned investment in R&D means Animalcare’s earnings multiples over the next few years fail to reflect the value we expect to be generated over the longer term. Our valuation of £41.9m (201p a share) is based mainly on a DCF model, with the peer group earnings multiples essentially a reality check.
Get The News You Want
To Read the Entire Report Please Click on the pdf File Below
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.