Coming to terms with the pandemic, pet ownership has soared in Australia as we turn to animal companionship which has delivered a big boost in revenue for Apiam Animal Health (ASX: AHX) and their nation-wide network of vet clinics.
Despite the quarter traditionally being the quietest for Apiam, the Company has reported $34.6m in revenue for the quarter ended 30 September 2021, representing a 16.7% increase on the previous corresponding period. Apiam also delivered $21.0m in gross profit, a 26.4% increase over the same period.
Key to unseasonal performance is the increased activity Apiam is seeing from its mixed animal clinics where much of their network had previously been focused primarily on commercial pig and feedlot services. This was echoed in a 2021 survey conducted by Animal Medicines Australia (AMA) which reported 6.8 million Aussie households now own a pet, 15% more than pre-pandemic.
“The sustained gross profit uplift that we continue to deliver period-on-period, reflects the growing contribution that dairy and mixed (companion) animal clinics are making to the Group as well as our ongoing strategies to ensure strong revenue capture across all areas of the business,” said Apiam Managing Director, Dr Chris Richards.
With its rising revenues and existing footholds across regional Australia, Apiam has benefited from widespread adoption of working from home. This has subsequently seen a large chunk of urban residents seeking a tree change for more comfortable work-life balances, in which many cases include pet ownership.
To meet the service demands in these regions which have become increasingly populous, Apiam recently acquired Victorian clinics in the Greater Geelong and Greater Ballarat regions which have emerged as growth corridors, as well as clinics in Queenland’s Scenic Rim and Harbour City. Via integration of these clinics into Apiam’s existing network, the vets and animal health professionals are able to share resources to meet high industry demands while gaining access to Apiam’s national support services.
“Each of these acquisitions takes Apiam in Q1FY22 into markets and regions we have identified as rapidly growing and under-serviced. We continue to identify these types of opportunities and expect similar acquisitions to be a key feature of our growth strategy in the year ahead,” said Dr Richards.
While demand for animal health services is only expected to grow, Apiam could find themselves very busy in the months ahead with their flagship feedlot services to be in high demand soon.
The current neutral El Niño–Southern Oscillation (ENSO) is having little influence on Australia’s climate. However, parts of South America and the United States continue to experience dryness as a lingering impact of the 2020 La Niña event which is impacting their feedlot supply to the global market.
As experts in regional animal health, cattle and sheep are still a hugely lucrative business for Apiam. Climate conditions brought upon from drought had a negative impact on herd numbers through 2018 but with those herd numbers having rebuilt over the past three years as the country has recovered.
Australian Bureau of Meteorology’s climate outlook for September to November 2021 suggests there is a greater than 75% chance of exceeding median rainfall across Australia which should further boost herd numbers, of which many are serviced by Apiam’s team of regional animal health experts.
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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