Shares in animal veterinary practices group CVS (CVSG:AIM) gained 3.6% to £19.47 on Thursday after reporting first-half like for like sales growth of 7.8% which accelerated in the first two months of the second half.
In the first two months of the second half like-for-like sales growth accelerated to around 10% helped by higher pet numbers and price rises of around 3%.
CVS operates in a market with favourable consumer trends buoyed by higher ownership of pets throughout lockdown and increased ‘humanisation’ of animals.
Peel Hunt points out that veterinary practices are now Covid secure and industry guidance allows vets to use their professional judgement, in contrast to the first lockdown where vets were restricted to emergency use.
Today’s strong results prompted the broker to increase its 2021 and 2022 earnings per share forecast by 14% and 9% respectively.
RESILIENT PERFORMANCE
Interim revenues grew 9.4% to £245.6 million which translated into a 38.8% increase in pre-tax profit to £29.7 million, reflecting relatively fixed costs and stable vet vacancy rates which averaged 7.5% in the first eight months.
Growth was driven by higher new client registrations which grew around 17% and a roughly 6% increase in client spending within the practices.
Strong cash generation of £52.3 million allowed the group to reduce net borrowings to £44.4 million (£63.5 million) despite spending £10.6 million (net of cash acquired) on acquisitions.
