ECO Animal Health reports strong interim results; sees upbeat second half - UPDATE

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ECO Animal Health (LON:EAH) reported an increase in interim profits and said that following a positive start to the second half, it expects nine month sales to be “comfortably ahead” of last year.

In the six months to end September, the veterinary pharmaceutical company saw its profits from continuing operations rise from £0.42 million for the same period of 2010 to £0.44 million, while earnings per share jumped 50 percent from a year earlier to 0.53 pence.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) were unchanged at £2.2 million and pre-tax profits reached £0.31 million compared to £0.5 million in the first half of 2010.

Sales declined from £12.3 million a year earlier to £11.9 million, however, in US dollar terms, revenues climbed 5 percent due to ECO’s “strong” performance in major markets - Latin America, Asia and the Middle East.

ECO had £8 million at the end of September after spending £2 million on further drug registration work and the annual dividend; cash generation during the period reached £1.5 million.

The group said that based on orders booked for delivery in the third quarter, total sales after nine months should be “comfortably ahead” of last year. ECO highlighted the approval for its Aivlosin product in Canada, which was received late last month.

The approval is expected to have a significant impact in the next financial year, said ECO, adding that it plans to begin sales after the end of the current year.

In addition, ECO is currently preparing to launch Aivlosin in the United States, where it said it expects to receive a long awaited registration from the Federal Drug Administration shortly.

"I am pleased to report that ECO Animal Health Group has again delivered a good set of results...Sales and operating profit were comfortably ahead of our budget although below last year’s outturn," said chairman of ECO Peter Lawrence.

“ECO’s recent additional investment in people and new offices, ahead of imminent further marketing approvals, reflects management’s confidence, despite continuing worldwide troubled economies, in the future of the business and its ability to drive growth."

Broker Killik and Co said the outlook remained positive for the firm, with the second half reported as starting well, boosted by the receipt of orders deferred from the first half.

"As always, the key value driver to the business remains the approval of the Aivlosin antibiotic in the US, which management hope to secure “shortly”. 

It said if the group could capture 10 per cent of the total market for antibiotics in pigs and poultry, which is estimated at around $1.2bn, the total gross profit for the product could be in the order of around £30 million per annum.

"This would represent a very attractive revenue stream to a large veterinary pharmaceutical player with an established sales force."

As at 3pm, the firm's shares were up 1.83 per cent, to trade at 222.5 pence.