African swine fever, trade war to hit ECO Animal Health profit; shares plunge

© Reuters. African swine fever, trade war to hit ECO Animal Health profit; shares plunge

(Reuters) - Veterinary medicines maker ECO Animal Health Group (L:EAH) said on Monday business in its biggest market, China, was hit by an outbreak of the fatal African swine fever, while the ongoing U.S.-China trade war squeezed margins in the United States.

Shares of the AIM-listed company lost nearly half their value in early deals, after it warned annual trading performance could be significantly below the current market view.

Sales in China slumped about 60% in the six months ended September, it said. The region, along with Japan, accounted for about 35% of overall sales, according to ECO Animal's latest annual (https://www.ecoanimalhealthgroupplc.com/~/media/Files/E/Eco-Animal-Health-Group/investor_relations/reports_documents/2019/annual-report-2019.pdf?) report.

The disease has killed millions of pigs in China since it was first reported in August last year. Japan's Ajinomoto Co <2802.> last week cut its annual profit outlook as the outbreak hurt its animal nutrition business.

Peel hunt analysts said falling herd sizes in China have led to a sharp reduction in demand for antibiotics as farmers have focused on dealing with the disease and conserving cash.

ECO Animal Health also flagged the impact of the trade war between Washington and Beijing on its margins.

"The China-USA trade tensions have further exacerbated the effect due to the U.S. swine producers having limited ability to capitalize on the anticipated export market created by the pork shortage in China," the company said.

That led to overproduction and depressed prices and margins in the United States, it added.

ECO Animal Health on Monday also moved interim Chairman Andy Jones to a permanent role.