Shares in animal health products supplier Animalcare (ANCR:AIM) are down 15.9% to 225p after a warning that earnings will miss market expectations in 2018.
Animalcare blames the impact on gross margins from a changing sales mix and competitive pressures for lower than anticipated earnings before interest, tax, depreciation and amortisation (EBITDA).
‘The company is expected to deliver further incremental growth in underlying EBITDA, underlying net earnings and earnings per share against 2017 results, maintaining at least double digit growth,’ comments Animalcare.
For the year-end to 31 December 2017, expectations remain unchanged with a 9.5% increase in sales to £91.9m surpassing management forecasts.
Animalcare recently acquired Ecuphar to create a pan-European animal health business, attracted by its pipeline of veterinary pharmaceutical products.
The acquisition is also expanding its direct sales operation to seven countries and its reach into 50 export markets.
WHAT IS THE DAMAGE?
Stockbroker Panmure Gordon analyst Mike Mitchell has hiked his sales forecasts from £97.3m to £98.5m in 2018 and from £105.1m to £105.3m the year after.
He has cut EBITDA expectations by 11% to £13.5m in 2018 and by 15% to £15.2m in 2019.
Mitchell is disappointed that Animalcare is operating in a lower margin environment in the near-term, but believes investors need to be patient as the integration of Ecuphar continues.
