ECO Animal Health reports strong start to year after 2010 revenues climb 15%

ECO Animal Health (LON:EAH) reported a strong start for the current year after achieving what it called a good set of results in the year to 31 March, which featured a 15% improvement in revenues, while earnings jumped 36% from a year earlier.

The period has also featured a number of operational milestones, which included the granting of further drug registrations for Aivlosin and Ecomectin with more expected in the current year and the formation of joint venture with a Chinese partner to distribute both parties' products in USA, which ECO said accounted for a third of the global market for animal health drugs.

At the end of last month, the US Federal Drug Administration (FDA) approved ECO’s Chinese manufacturing facility, which produces the Aivlosin active pharmaceutical ingredient. The facility has already been approved by EU and Japanese regulatory authorities.

The company has also bought Eco Pharma in Japan to enhance distribution in the territory.

“ECO Animal Health Group has delivered a good set of results for the year ended 31 March 2010 and has started the current year strongly. We are excited at the prospect of commencing trading in the USA through our new joint venture and are confident that in due course this will be boosted by the granting of further licences for Aivlosin and generic companion animal therapeutic drugs,” said chairman Peter Lawrence, adding he was “encouraged about the future prospects of the company and the management’s ability to optimise value by continuing to generate attractive returns”.

On the financial front, revenues climbed 15.2% from £18.9 million to £21.77 million. Cost of sales also increased, rising from £11.2 million to £12.74 million. Gross profit climbed from £7.7 million to £9 million and pre-tax profits increased from £1.4 million to £2 million.

Pre-tax earnings per share from continuing operations jumped 36% to 3.49 pence.

The company generated £3.3 million of cash from operating activities during the year compared to last year’s £2.3 million.

The board has reviewed the company’s short term cash requirements and, after generating cash of over £3.3 million from operations, reinvested all of it and more to expand the business and create a larger group.

“It is important that the company manages its cash to ensure the successful and rapid launch of Aivlosin into the US market, as soon as the anticipated and long awaited regulatory approvals are received,” ECO said in the report.

The company declared a dividend of 2.3 pence per share to “immediately apply more funds to continue development, enter new markets and increase its share of existing markets.”

The committed undrawn net facilities of the group were £1 million, unchanged from 2009.
Shares in the company were up nearly 6% in midmorning deals, albeit off earlier highs just after the release of the results.