CVS underlying earnings to be 'comfortably above' market expectations

Veterinary services group CVS expects to report full-year underlying earnings "comfortably above" current expectations, as revenues improved and cost-saving efforts managed to offset a slight reduction in gross margins in the year to the end of June 2019.

Total revenues for the year came to £406.5m, up 24.2% year-on-year, while like-for-like revenues grew 5.2%.

As a result, CVS expects underlying earnings to be in line with its recently-upgraded forecast and comfortably above current consensus market expectations.

CVS generated improved gross margins in each of its small animal, equine and referrals businesses during the year, but total gross margins reduced to 76.2% from 79.6%.

The AIM-listed group, which previously announced that it was targeting cost savings of £1.2m in the second half, confirmed that its targeted savings had been achieved and that it remained "keenly focused" on operational efficiency.

Chairman Richard Connell said: "A number of actions have been taken to both address the key issues which contributed to the underperformance in the first half and to position the group for future growth.

"The board remains confident of the strengths of the business and the opportunities from a number of initiatives and is confident these will support continued restoration of shareholder value."

At 0845 BST, CVS shares were up 5.38% at 931p.