Dechra Pharmaceuticals shares fell as much as 15 per cent after the veterinary products firm warned that full-year profit will come in ‘at the lower end’ of expectations.
The FTSE 250 manufacturer of medicines and vaccines for pets said trading patterns had been ‘unpredictable’ in the US, one of its key markets, since the start of the year, as wholesalers reduced their inventory levels.
That’s despite revenues increasing 5.2 per cent in the last six months of 2022 to £377.4million, or by 13.5 per cent at actual exchange rates, with strong growth in North America
Sales of products for pets, which make up the majority of sales, grew by 5.2% in the half year
Pre-tax profit fell sharply to £29.7million, from £53.4million the year before, though the group said this was mostly due to an extra £13million spent on research and development, and ongoing investment in its existing drugs pipeline.
‘The global companion animal healthcare market has returned to more normalised levels of growth following the extraordinarily high rates seen during the Covid-19 pandemic, and against that context our performance has been robust,’ the firm said.
But added: ‘Trading patterns at the start of 2023 have been unpredictable in the US, where wholesalers have been reducing inventory levels.
‘Based on the recent US de-stocking and current exchange rates, the board now expects full year underlying operating profit to be at the lower end of analyst expectations.’
Veterinary groups have been buoyed by a boom in pet ownership, with CVS last week announcing it was eying further expansion outside the UK after reporting double-digit profit growth.
Dechra makes a range of medical products for animals – from antibiotics for pets and poultry, to sedatives and anaesthetics for horses.
It said products for companion animals, which make up the majority of sales, grew by 5.2 per cent, while revenues from products for food-producing animals rose 6 per cent.
Sales of medical products for horses, which only represent 9 per cent of total revenues, surged by 24 per cent, thanks to recent acquisitions.
Total revenues in North America jumped 16 per cent in the half year.
European sales were just 0.4 per cent higher, while revenues fell 9 per cent within its international arm, which comprises Brazil, Australia, New Zealand, South Korea and Japan.
The group announced an interim dividend of 12.50p, up 4. 2 per cent from 12p the year before.
Dechra shares were 12 per cent lower at £27.25 in afternoon trading on Monday. They have lost around a third of their value over the last year.
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