Animalcare swings to loss as costs outweigh revenue jump

30th Apr 2019 09:05

(Sharecast News) - Animalcare Group on Tuesday swung to an annual loss after delayed product launches and cost increases offset the impact of double-digit revenue growth.The veterinary sales and marketing organisation recorded a loss before tax of £0.4m for 2018, compared to a profit before tax of £0.4m the year before, despite revenue having increased by 16% to £72.5m, or 2.7% on a proforma basis, as revenue from the Companion Animals division increased by 6% to £44.5m.However, this jump in revenue was offset by higher costs, including a 70% increase in research and development expenses to £4.8m and a 21% increase in general and administrative expenses to £16.7m.The AIM traded company said that overall growth was also impacted by some out of stocks due to supply chain challenges, delays in approvals for new products and the pace of the decline in antibiotic prescribing.Jan Boone, chairman of Animalcare, said: "Animalcare made good progress in 2018 as we focus on creating a competitive platform for future growth in the global animal health sector. We continue to improve the underlying profitability of the group, and the disposal of our Wholesale Division was in line with our strategy to focus on the higher-margin veterinary pharmaceuticals business, a key growth driver."The company also bolstered its pharmaceuticals division with the appointment of AstraZeneca veteran Jenny Winter as chief executive, who has identified a path for the business following a full review.Following the review, the company will build itself as a business focused around core therapy areas and higher margin products with the vet as its primary customer, aiming to grow quickly and improve cash generation to enable investment in future growth and innovation."Our goal is to deliver sustainable and profitable growth and to achieve this, we will focus on meeting the needs of vets in therapeutic areas where we have existing strengths and can further add value. Improving cash generation is a key focus for the business and we will continue to drive improvements in supply chain efficiency and closely monitor our cost base, whilst selectively investing in future innovation," said Winter.Animalcare Group's shares were up 3.89% at 147.00p at 0921 BST.