MARKET REPORT: Profits purring at Dechra as pet ownership booms

Dechra Pharma saw its profits bound higher after cashing in on a boom in pet ownership during the Covid pandemic.

The animal medicine maker saw its profits for the six months to December jump 22 per cent year-on-year to £93.9million.

Revenues, meanwhile, were up nearly 16 per cent at £332.4million. Dechra also hiked its interim dividend by 8 per cent to 12p per share.

Pandemic boost: Animal medicine maker Dechra saw its profits for the six months to end December jump 22% year-on-year to £93.9m

The firm noted that its half-year performance had been boosted by ‘increased spending on pets’ during the pandemic as people stuck in lockdown sought out companionship and stress relief from cats, dogs and other animals.

Recent acquisitions of drugs used on horses had also helped increase sales in North America, Dechra’s largest market, by over 26 per cent over the period.

The outlook was also upbeat, with the firm noting ‘strong’ trading from key markets in its second half, with boss Ian Page adding that its prospects ‘remain excellent’.

However, the outlook was clouded slightly by pet ownership levels becoming more ‘normalised’ as the effects of the pandemic and lockdown restrictions began to fade. 

This appeared to have weighed on the share price, which despite spiking higher early in the session ended the day down 0.5 per cent, or 18p, at 3766p.

Dechra’s pandemic pet profit boost followed a similar trend from retailer Pets At Home, which last month upgraded its profit guidance as a result of ‘continued growth’ of new pet owners in the UK driving a boom in spending at its stores and vet clinics.

The FTSE 100 was down 0.4 per cent, or 29.29 points, at 7484.33 while the FTSE 250 slipped 1.2 per cent, or 265.41 points, to 21097.19. 

Stock Watch –  Synairgen

Shares in pharma firm Synairgen collapsed 84 per cent after a Covid-19 product failed a late-stage clinical trial.

A study of its treatment, designed to reduce the time patients spend in hospital and speed up recovery from the virus, failed to show meaningful changes to either.

Boss Richard Marsden said advances in patient care over the course of the pandemic may have ‘compromised the potential’ of the treatment.

Shares fell 84.1 per cent, or 143.82p, at 27.18p.  

Fears over the Ukraine crisis continued to grip markets despite news of a possible summit between the US and Russia to help reduce mounting tensions in Eastern Europe.

Russia-focused firms were once again under pressure, with miner Polymetal International, which owns projects across Russia, tumbling 8.5 per cent, or 99p, to 1070.5p.

Steel firm Evraz, part-owned by Chelsea owner Roman Abramovich, also dropped 5.7 per cent, or 16.2p, to 267p amid fears any sanctions on Russia will constrain its business.

Oil prices remained elevated, with Brent Crude climbing back to over $94 a barrel amid concerns any conflict could disrupt global supplies of oil and gas.

Sanction worries weighed on BP, which has large investments in Russia through its joint venture with Rosneft. 

Shares in the oil giant dipped 0.8 per cent, or 3p, to 388.4p. Rival Shell, which also has business interests in Russia, lost 0.6 per cent, or 12.8p, to 1944.2p.

It came as Steve Hill, Shell’s executive vice-president for energy marketing, blamed the high and volatile gas prices over the past year on an influx of hedge funds into European energy markets.

The potential for travel disruption from the conflict also hit several travel stocks, with British Airways-owner IAG dipping 1.7 per cent, or 2.7p, to 158.82p while Easyjet sank 2.4 per cent, or 16.2p, to 658.2p and Wizz Air slipped 0.9 per cent, or 35p, to 4046p.

Rolls-Royce, which makes turbine engines for passenger aircraft, was also down, by 2 per cent, or 2.34p, at 114.72p amid worries of subdued demand.

Gambling group Playtech saw another twist in its takeover saga after revealing that its boss Mor Weizer was looking to join forces with the firm’s second-largest investor, Hong Kong-based firm TT Bond Partners, to make a possible bid for the firm. The group’s shares were down 1.6 per cent, or 11p, at 660p.

UK-based Satellite Vu, part of the portfolio of LSE-listed space investment trust Seraphim, signed a deal with Elon Musk’s Space X to launch a thermal imaging satellite next year. Seraphim’s shares fell 0.4 per cent, or 0.4p, at 105p.