The result confirms Apiam’s standing as the dominant player in Australia’s regional vet sector.
Animal health company Apiam (ASX:AHX) is capturing the market’s attention, with plenty of sector tailwinds it builds out a leading national vet network.
And the company’s half-year results this morning confirmed that momentum, as revenue to December 31 rose to $61.2m.
As a measure of improved operational efficiency, gross profits climbed by another 13.4 per cent to $34.5m, while the company reported a 35.2pc increase in underlying net profits to $2.7m.
The gross margin of 56.3 per cent reflected a multi-year period of improvement, as Apiam drives higher revenues from a lower operating cost base.
“Since FY18, Apiam has consistently delivered material improvements in gross margins due to increased revenue capture at the clinic-level, targeted changes in business mix and the impact of strategic acquisitions,” the company said.
Net cash flows from operating activities ripped higher to $6.4m, a gain of 137 per cent from the prior year period.
Speaking with Stockhead following the result, Apiam CEO Dr Chris Richards highlighted that the impressive numbers reflect the benefits of AHX’s multi-year capex program to build operating systems capable of running a much bigger company.
“We’ve spent the last few years putting our backend systems together, and now we’ve got an established cost base where organic growth and revenue from acquisitions really starts falling through to the bottom line,” he said.
“The other thing these half-year numbers show is that we’re set up now with a strong balance sheet to make a number of acquisitions and grow the business quite rapidly,” he said.
Richards said the company will continue to pursue its strategic acquisition plan as it establishes a dominant market footprint for vet care and farm animal health across regional Australia.
He also flagged strong market conditions in the farming industry in the wake of a bumper season for domestic crops.
“Obviously there’s a big tailwind for us on the companion animal side, with increasing pet numbers and population growth in our key markets.”
“Then on the farming side, Australian farmers just delivered the second largest grain crop in the country’s history. So that has a really positive benefit on the feedlot industry and the pig industry over a multi-year horizon.”
Taken in aggregate, Apiam has a model that will not just benefit from broader sector tailwinds – it has the size, balance sheet strength and market footprint to capitalise on the opportunity.
As a measure of the company’s strong outlook, Apiam declared an interim dividend of 1.2c per share, up 50 per cent from the prior comparative period.
This article was developed in collaboration with Apiam, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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