ECO Animal Health Group plc (LON:EAH), a leader in the development, registration and marketing of pharmaceutical products for global animal health markets has provided an unaudited trading update for the financial year ending 31st March 2022.
ECO commented in early January 2022 that China pork prices were volatile, and producers remained cautious. Although these trading conditions have persisted throughout the first quarter of 2022, ECO has continued to trade in line with revised revenue and margin expectations.
Further encouraging progress has been made within the R&D portfolio and investment was maintained at the budgeted rate, resulting in R&D cash expenditure, including capitalisation, of about 13% of revenue in the full year and a charge to the income statement of £8.7million. This charge to the income statement reflects some exciting early-stage technologies. This, together with further investment in critical support functions, is expected to result in EBITDA (for the year ending 31 March 2022) 15% to 20% below consensus expectations.
Exposure to Russia and Ukraine
The ECO Group has no business in Ukraine. The annual revenue derived from Russia has been less than £0.5m in each of the last three financial years. The current receivables due from the ECO distributor in Russia are approximately €430,000 and the Board continues to explore a number of mechanisms to recover this debt.
Marc Loomes, ECO Animal Health CEO said:
“The pork commodity price in China continues to be volatile but we are pleased with recent trading and our expectation of meeting revenue consensus is an important indicator of a return to more stable trading conditions. We have kept investment on critical organisation development and strategic R&D at our planned levels despite the reduced revenues from China. This decision is beginning to bear fruit and we look forward with excitement to the announcement of new regulatory approvals.”
“We hope for a speedy resolution to the conflict in Ukraine and stay ready to support our business partners in Eastern Europe in any way we can.”