Animalcare Group plc (AIM: ANCR) , 1H20 trading update for the six months ended 30 June 2020 reports resilient first half performance despite the disruption caused by COVID-19.
While trading for the first half was down on the prior year, the overall financial performance was at the ‘higher end of the Company's range of scenario modelling’.
Revenue for the period declined by 4.4% to £34.5 million (4.8% at constant exchange rates) reflecting the disruption to veterinary activity across Europe caused by the pandemic.
This effect was largely observed within the Companion Animal portfolio as a direct result of the lockdown measures restricting veterinary activity, which was only partially offset in part by strong growth in the Production Animals business segment.
However, despite the reduction in revenue, underlying EBITDA margin remains in line with the first half of 2019 as the Company benefits from the impact of cost efficiencies measures taken during 2019 together with decisive action to realign SG&A spend during the pandemic.
As part of the Company’s growth strategy, management ‘remain committed to strengthening the balance sheet and improving cash generation’ to create capacity to invest in future growth.
As at 30 June 2020, net debt stood at £18.1 million, broadly in line with the year ended 31 December 2019.
Shares in ANCR opened flat at 165p following the trading update.
Outlook
Evidence of a return to more normal customer activity in some markets was visible towards the end of the first half and has continued to develop post period-end. However, uncertainty about the shape and extent of a recovery in demand prevails.
Despite the reduction in SG&A, the Company has maintained its investment in the drivers of future growth including new product launches, pipeline projects and business development opportunities.
Furthermore, the Company expects cash conversion to improve during 2H20 as stock profile returns to more normal levels post overstocking of certain key brands.
Jenny Winter, Chief Executive Officer commented: "Given the unprecedented disruption to the animal health sector in recent months, our resilient performance highlights our organisational agility and the strength of the platform we have built in recent years. Uncertainty remains over the shape and speed of the recovery in the second half and we continue to adapt to the evolving needs of our veterinary customers. Huge credit must go to our employees whose skills and commitment have continued to drive the Group forward during this difficult period.
"Despite the challenges, our focus on our growth strategy is as strong as ever and we continue to invest in our pipeline, new products and the pursuit of business development opportunities."