Trading update: FY25 EBITDA marginally ahead

In a Trading Update for the year to 31^st March, Eco Animal Health reports that, due to strong trading in the final quarter, (adj.) EBITDA for the year is expected to be marginally ahead of expectations. FY25 revenue is expected to be c.7.0% below market expectations (-5% on a currency-adjusted basis), indicating revenue of c.£79.4m; the Group references market consensus FY25 (adj.) EBITDA of £7.2m (ED Est: £7.2m) and revenue of £85.3m (ED Est £84.2m). The improvement in EBITDA is driven by gross profitability above 45.0% (FY24: 42.1%) and control of overhead costs.

Overall, the Group envisages that this level of gross profitability is sustainable (on a constant currency basis) and has made no changes to its outlook for FY26 and FY27. This is a validation of Group efforts to address operational processes and control costs in the face of what is described as “currency headwinds and geopolitical and economic uncertainty”.

Backed by the level of cash generation indicated, and as outlined in detail at the recent Group R&D Day (March 13^th), Eco is committed to maintaining investment in the pipeline of major new products under development. We note the significance of the European Market Authorisation Application (MAA) for ECOVAXXIN^®MS, Mycoplasma synoviae submitted on 3^rd March (‘Milestone poultry vaccine submission’) as evidence of the defined pathway to commercialisation for the first of nine flagship products under development.

For reference, FY25 company (adj.) EBITDA guidance is in line with ED Est; our prior estimates are shown below. Our Fair Value remains 97p – 102p pending further review of the product pipeline detailed in the recent R&D Day.