Q3 Headwinds - forecasts updated

Weak end markets affected demand in the Advanced Nutrition segment; as previously flagged, weak markets in shrimp, sea bass, and bream continue to impact demand and pricing for the group’s live feed products.  Added to this, there was some margin pressure due to oversupply of Artemia sourced from the CIS region, although this had a lesser impact on overall trading performance as the Company reduced sales volumes from this source. Economic factors in Mediterranean markets also continued to play a part in the demand and pricing of sea bream and sea bass, with the consequent knock on effect of demand impacting revenues in the Nutrition division. Although there may be some early signs of stabilisation in pricing, this is not expected to have a beneficial impact in the short term.

Animal Health division field trial revenues are lower primarily due to accelerated progress; success in field trials for one of the group’s novel treatments has meant that fewer trials are required to demonstrate the safety and efficacy of the product. This is good news. However, in the short term less revenue will be derived from its commercial field trials as a result. The Company also experienced delays in commencing trials in new territories.  The Company confirmed that marketing authorisation for its novel sea lice treatment remains on track for circa the middle of 2020. 

The company is making good progress on negotiating licensing deals for the non-aquaculture health products; that could, if concluded in the short term, substantially offset the expected impact on margin caused by Nutrition and Health operational events. 

In light of these operational events, we have adjusted our forecasts in line with the guidance given by the company. Our new forecasts are shown below: