Pharmaceuticals for animal developer Eco Animal Health (EAH:AIM) has warned that it will miss profit forecasts by between 15% and 20% for the year to 31 March 2022.
The company said earnings before interest, tax, depreciation and amortization would be below market expectations after ploughing additional funding into research and development of ‘exiting early stage’ technologies.
Animal Health expects to take an £8.7 million charge against profit this year, news that sent investors running. Animal Health shares were trading nearly 20% down at 10.30am on Tuesday (15 March 2022) at 122p.
MESSY PORK MARKETS IN CHINA
Eco Animal Heath decided to maintain planned investment on ‘critical organizational development’ and strategic development despite reduced income from China.
As previously communicated, pork prices in China have remained volatile from October 2021 through January 2022. It caused pork producers to remain cautious, impacting their purchases of the company’s Aivlosin product.
Despite these challenges the company said it continued to trade in line with revised revenue and margin expectations.
Chief executive Marc Loomes commented: ‘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.’
PLAYING A LONG GAME
At a recent capital market day presentation (24 January 2022) the company outlined the potential commercial benefits of its significant investment into new products.
Later in the month the company received two new authorisations for its Aivlosin product in China. It is now approved for the treatment of respiratory disease in chickens laying eggs for human consumption and breeding birds.
It also received approval for swine respiratory disease, adding three important bacterial respiratory pathogens of swine.
China is the largest producer of table eggs and accounts for a third of the world’s laying birds.
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