Vet group sinks 50pc as US expansion backfires
PREMIER Veterinary Group looked as sick as a dog yesterday as it issued a massive profit warning after flopping in the United States.
Its shares collapsed nearly 50pc after it warned sales and profits for its next financial year are likely to be well below expectations.
In a double whammy for investors, the company also said that it is likely to need extra funding next year to stop its US business from going under.
The problems started in May, when Premier warned that cash restraints in the US vet industry were curtailing the take-up of its pet care plan, which collects and manages direct debits.
As a result, it expects to have added cover for just 4,000 animals by the end of the financial year. For context, the number of dogs and cats in the US is put at 70m and 74m respectively.
Despite selling its UK loyalty membership group for £4.5m earlier this year to further fund its US expansion, Premier now believes that it will take another year to gain full momentum.
Although it expects to reveal strong UK and European performance this year, Premier also warned that its £3m coffers may need a boost in the third quarter of its next financial year if US operations are to stay afloat.
Chief executive Dominic Tonner said it was ‘disappointing’ that Premier’s US business is taking longer than expected to overcome weakness. Shares fell 49.7pc, or 42.5p, to 43p.
The story couldn’t have been more different for Pets At Home, which hit its highest value since January after Berenberg gave it a ‘buy’ rating. The company, which operates a vet business and sells pet products, scared investors this year by slashing prices (and profits) to stay competitive.
But Berenberg claims the growth in products being sold more than offsets this year’s price reductions, with the business remaining on track to deliver results in line with market expectations.
The broker also thinks Pets At Home will be boosted by new innovations such as its flea medicine subscription service. Shares rose 6.6pc, or 12.9p, to 207.5p.
The FTSE 100 advanced 0.6pc, or 46.74 points, to 7310.64, lifted by a drop in the value of the pound after Theresa May’s Brexit speech in which she suggested a two-year transition period for the divorce.
Shares in takeaway app Just Eat climbed following the news that rival Uber, which also offers a food delivery service, has lost its licence to operate in London due to a lack of corporate responsibility.
Although the ruling will only affect Uber’s core ride-sharing business, leaving Ubereats unaffected, some traders assumed that Just Eat’s market share would increase following the ban, and piled into the stock. Shares advanced 0.9pc, or 6p, to 690p.
Acacia Mining, which has been devastated this year by a ban on the export of gold concentrate in Tanzania, finally had some good news – it will circumvent the ban at its Buzwagi mine in the country by producing only gold bars until the end of its life in 2020.
Acacia said the mine will now be able to sell an additional 8,00010,000 ounces per month for the remainder of 2017, and shares rose 1.7pc, or 3.1p, to 181.7p.
Security firms Indigovision and Westminster Group both tanked on the back of poor results.
Indigovision, which sells video security systems, fell 20.1pc, or 50p, to 199p, while Westminster, which provides security services for airports, ports and ferries, plunged 11.9pc, or 1.75p, to 13p after a £1.4m first-half loss.