Softer UK markets hit underlying sales at CVS
By Benjamin Chiou
Date: Thursday 30 Jan 2025
(Sharecast News) - AIM-listed veterinary services group CVS saw a drop in underlying revenues in its first half, and said it was stepping up its investments in Australia to make up for uncertainty in the UK.
Nevertheless, the board said it was still confident in hitting market expectations this year.
CVS, which operates out of the UK and Australia, estimated that employment costs would rise by £11m each year as a result of the National Insurance changes announced in the Autumn Budget along with rising minimum and living wages, which are set to kick in this April.
Meanwhile, an ongoing CMA industry probe into veterinary pricing launched last March - investigating whether customers are paying over the odds for medicines and treatments - means CVS is continuing to be "more selective about investment in the UK, with very disciplined capital investment in facilities, equipment and IT and no UK acquisitions".
The company said it is "increasing its investment in growth in Australia, where there is greater stability and certainty in the regulatory environment around the sector".
The comments came as the firm delivered a trading update for the first half ended 31 December, revealing that like-for-like sales were 1.1% down on last year due to softer market conditions in the UK, particularly in the online retail and laboratory businesses.
Overall group sales rose 6.6% to £341.8m, while adjusted EBITDA was 4.5% higher at £67.4m.
"Whilst the Board continues to be mindful of headwinds in the UK and the people cost increases as a result of the UK Autumn Budget, the fundamental need for high quality veterinary care remains strong. The expansion into Australia is progressing well and CVS remains well positioned to deliver attractive growth in shareholder value over the medium term," the company said.
Shares were more or less flat at 1,029.4p by 1226 GMT.
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