May 9, 2020

 

Phibro Animal Health Corporation reports 8% animal health sales growth

 

 

Phibro Animal Health Corporation announced its financial results for its third quarter ended March 31, 2020, with its animal health sales growing at an 8% rate, reported Business Wire.

 

This reflected accelerating growth in vaccines and nutritional specialty products, plus strong sales of MFAs and other products in many regions, almost offsetting the loss of last year's sales in China. The company believes it experienced only a modest benefit from customer stocking in the quarter. International demand for their poultry vaccines continued to increase, driven by new product introductions and increased penetration. Poultry and dairy-focused nutritional specialty products are gaining additional acceptance, as customers gain an understanding of the animal welfare, health and efficiency benefits of the nutritional specialty products.

 

For the June quarter, unprecedented demand disruption and production impacts are expected in the global food animal industry, due to the COVID-19 pandemic. The company is actively working with its customers to support their operations and remain the same trusted industry partner that they have always been. While sales to date have continued close to their expectations, a decline in product demand is anticipated in the June quarter, as customers attempt to navigate rapidly evolving market conditions.

 

Net sales of US$210.7 million for the three months ended March 31, 2020, increased US$5.0 million, or 2%, as compared to the three months ended March 31, 2019. Animal Health increased US$9.8 million, while Mineral Nutrition and Performance Products declined US$4.5 million and US$0.3 million, respectively.

 

Net sales of US$139.0 million for the three months ended March 31, 2020, increased US$9.8 million, or 8%. Net sales of MFAs and other declined US$1.4 million, or 2%, as increased demand from poultry and cattle customers in the US and Latin America were offset by reduced volumes in China due to African Swine Fever and regulatory changes that took effect January 1, 2020. Net sales of nutritional specialty products grew US$6.4 million, or 23%, due to growth of domestic poultry and dairy products and the recent Osprey acquisition, which accounted for approximately half of the nutritional specialties sales growth. Net sales of vaccines increased US$4.8 million, or 28%, driven by strong international demand for poultry vaccines and growth in adjuvant sales.

 

Net sales of $56.2 million for the three months ended March 31, 2020, decreased US$4.5 million, or 7%, due to lower average selling prices, partially offset by increased overall unit volume. The decline in average selling prices is correlated with the movement of the underlying raw material costs.

 

Net sales of $15.6 million for the three months ended March 31, 2020, decreased US$0.3 million, or 2%, driven by lower volumes of ingredients for personal care products.

 

Gross profit of $69.6 million for the three months ended March 31, 2020, increased US$4.7 million, or 7%, as compared to the three months ended March 31, 2019. Gross profit increased to 33.0% of net sales for the three months ended March 31, 2020, as compared to 31.5% for the three months ended March 31, 2019.

 

Animal Health gross profit increased US$5.4 million due to volume growth in nutritional specialty and vaccine products, partially offset by lower volume in MFAs and other. Favourable product mix contributed to an improved gross profit ratio compared to the prior year. Mineral Nutrition gross profit decreased US$0.8 million, as the decline in average selling prices and favourable product mix more than offset lower raw material costs. Performance Products gross profit increased US$0.1 million.

 

Selling, general and administrative expenses ("SG&A") of US$48.2 million for the three months ended March 31, 2020, increased US$5.9 million, or 14%, as compared to the three months ended March 31, 2019.

 

Animal Health SG&A increased US$5 million, due to increased investments in product development and marketing costs, the effect of the Osprey acquisition and increased variable compensation. Mineral Nutrition SG&A increased US$0.5 million due to employee-related costs. Performance Products SG&A increased US$0.1 million. Corporate expenses increased US$0.3 million due to increased public company costs.