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Investors have given National Veterinary Care (ASX:NVL) a sharp smack on the nose after it revealed earnings would fall below expectations in FY18.
The Gold Coast-based veterinary surgery operator says softer trading conditions in May and June have impacted the result, as have longer than expected settlements of previously announced acquisitions.
Although NVL expects statutory revenue to be more than 25 per cent higher than FY17, its says margins have taken a hit.
"Revenue across the general practice clinics was below expectations in May and June, which in turn impacted underlying EBITDA margin," the company says in a statement to the ASX.
The company has also failed to meet its targets for reducing staff expenses, saying that while good progress has been made it has taken longer than forecast to implement the cuts in employee expenses relative to revenue.
NVL shares fell more than 11 per cent on the news in early trading, hitting a low of $2.26 down 30c on Tuesday's close. They recovered slightly to settle above $2.30 by late morning.
NVL is forecasting underlying revenue in FY18 to grow by to between $81.5 million and $82.3 million.
Underlying EBITDA is now expected to rise by between 15 and 16 per cent to between $$12.4 million and $13 million. Previous forecasts were for growth of between 16 and 17 per cent.
Managing director Tom Steenackers remains upbeat after a solid year of growth for the company, driven largely by acquisitions.
"FY18 has been a year of focused consolidation and fast paced growth in terms of our acquisitions and our managed services businesses," says Tom Steenackers.
"To ensure we are building a business able to scale up significantly, we have continued planned strategic investment in the business, focusing on system efficiencies and enhanced support office resources.
"The business has continued to deliver good top line growth and we are optimistic about the range of opportunities for the business over the next 12 months."
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