The last time we reported on ECO Animal Health Group LON:EAH the AIM-listed, international veterinary pharmaceutical company, The Armchair Trader suggested that the north London-based company’s shares might be on the first steps to recovery after a difficult 2022.
Since then (1st May) ECO Animal’s shares are up nearly 20% and up nearly 25% over one-year on the back of its final results to the end-March. published at the start of the week (15th July).
Although ECO Animal didn’t make vast strides, the needle was pointing in the right direction across a broad range of vectors. The pharmaceuticals company saw its group sales increase 5% year-on-year to GBP89.4m, with encouraging progress in North America, where sales were up 22%.
Overall, on a constant currency basis, revenue was up 11% y-o-y to GBP94.5m, tantalisingly close to the magic GBP100m high-tide line. That said, due to currency fluctuations, gross margin fell 42%. When adjusted, however, earnings increased to GBP8m and EBITDA margin improved 9%.
Net cash up with access to undrawn credit
The company continued its investment programme, as telegraphed, with expenditure of GBP8.3m on par with 2022. Despite the continued R&D investment net cash was up marginally by GBP700,000 and the pharmaceutical company negotiated a revolving credit facility of GBP10m and GBP5m overdraft, both of which are available and undrawn.
David Hallas, ECO’s chief executive said: “Our focus is on supporting our core business while investing prudently in R&D pipeline which is our growth engine, and these results show us achieving these key objectives. We’re cautiously encouraged by trading as we move into the 2025 financial year, despite continuing volatility in currency, with robust activity in key markets. We look forward to what we believe will be another year of positive momentum in core markets as we start to crystallise our R&D efforts.”
As previously reported, ECO Animal is focussed on developing treatment in the animal healthcare sector, specifically vaccines and antibiotics for poultry and swine and had markets in 70 countries. The company’s leading product is Aivlosin, a proprietary medication for treating respiratory and intestinal complaints in pigs and poultry. The company’s medications also treat parasites and is developing new treatments in its core markets.
The driver of success, said Hallas, was Aivlosin, especially in the second half of the year, which saw sales of GBP82.4m, up 9% on 2022. ECO Animal’s parasite treatment Ecomectin also saw strong sales and overall the North American market was the catalyst for growth.
R&D, said Hallas, is the critical driver of ECO Animal and in 2023 the company was focussed on progressing its late stage projects, receiving trademark approval for Ecovaxxin in the EU, and getting over a significant hurdle to approval in the US, passing the US Department of Agriculture’s key safety studies adding to the company’s roster of products.
Releasing cash from property
ECO Animal also rationalised its real estate holdings, disposing of a number of freehold properties in New Malden and Mitcham, providing a welcome cash boost to the company’s coffers. This was supplemented by, as previously reported, by the sale of its Ecomectin horse treatments to ACME, and the proceeds were rolled back into the company’s R&D.
ECO Animal Health Group appears to be on a path of steady progress, despite facing currency headwinds. The company’s share price reflects this positive momentum, rising nearly 25% over the past year. Encouragingly, sales growth, particularly in North America, and a focus on R&D pipeline development bodes well for the future. While challenges remain, ECO Animal seems well-positioned to capitalise on its core markets and new product approvals, potentially leading to continued growth in the coming year.
