ECO Animal Health Group Achieves Record Sales in China
ECO Animal Health Group plc (LON:ECO), a leader in the development, registration and commercialization of pharmaceutical products for global animal health markets, is pleased to provide an update on its expected results for the fiscal year ended 31 March 2022.
The audit for the year ended March 31, 2022 is nearing completion and the results are expected to be released on or around the 18e August 2022.
Overall, the Group expects to report revenue for the year ended 31 March 2022 in excess of £82 million and EBITDA of approximately £6.5 million, which includes a gain of change of £1 million and the effect of the items mentioned below.
It has recently come to our attention that certain aspects of a sales tax related to products imported into a foreign jurisdiction where we operate through a subsidiary may have applied. ECO has imported an increasing volume of products into this country in recent years. This matter is at an early stage and no tax payment has yet been determined. However, it is likely that a substantial tax settlement may be required in due course and an estimated sum of £2.5 million has been provided for in our results for the year ended 31 March 2022. The sum has been allocated over the appropriate years and charged to Cost of sales in the income statement. The impact of this item for the year ended March 31, 2022 was a reduction in EBITDA of £1 million.
In addition, certain development costs in the amount of £0.3 million initially capitalized but which upon subsequent review were found not to meet the specific criteria required for capitalization resulted in an R&D charge. higher than expected in the consolidated income statement.
The first quarter of the 2021/22 financial year saw ECO Animal Health Group achieve record sales in China thanks to a favorable combination of structural changes in the industry and the recovery of the pig herd following the outbreak of swine fever. Africa, as well as changes in regulations on the use of antibiotics in animal feed. demand levels and sales opportunities for Aivlosin®. Revenue from China in the first quarter of fiscal year 2022/23 was significantly lower than the record levels recorded the previous year. This is a direct consequence of the persistently weak profitability and weak cash flow of major producers. However, gross margins in China were strong in the first quarter, reflecting the unique customer mix. Elsewhere, revenue in the Rest of the world grew strongly compared to the first quarter ended June 30, 2021.
A recent improvement in hog prices in China gives us some optimism for the rest of the year and the board continues to review overhead and capital expenditure levels against business trends.