ECO Animal Health Group PLC on Monday said it swung to a loss on higher expenses in the first half but remains ‘cautiously’ optimistic for the full year.

The Surrey-based animal health pharmaceutical company reported that it swung to a pretax loss of £626,000 in the first half ended September 30, from a £3.0 million profit the year prior.

ECO Animal noted that administrative expenses increased to £14.0 million, from £10.0 million previously. This was due to increased personnel costs, but it noted that it was partly offset by savings in legal, audit and professional.

The firm said revenue increased to £38.0 million, from £34.9 million a year ago. It noted that China and Japan delivered £9.7 million in revenue, accounting for 26% of its revenue, up from 24% a year ago.

Looking ahead, the firm said it expects to see stronger demand in the second half of the year, with its current order book and run rate of sales providing 90% coverage of its forecast revenue for the second half.

It said it is cautiously optimistic about meeting market expectations of £88.3 million in revenue and £7.7 million in adjusted earnings before interest, tax, depreciation and amortisation. In financial 2022, the firm posted revenue of £85.3 million, and adjusted Ebitda of £7.2 million.

In the first half alone, its adjusted Ebitda fell to £705,000 from £1.7 million a year prior.

Chief Executive David Hallas said: ‘I am very pleased to see continuing revenue growth, despite currencies headwinds for a large part of this first half. Adjusting for the currency effect underlying growth in revenues increased by 15%. We expect gross margins to improve in the second half due to sales mix and improvements in cost of goods.

‘We have strong visibility over second-half revenue. The board looks forward with cautious optimism to reporting the full-year numbers in line with market expectations.’

ECO Animal shares fell 0.9% to 106.50 pence each on Monday afternoon in London.

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