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Greencross (GXL.ASX) makes 'aggressive' inroads into NZ pet market, boosting local sales 21%

Tuesday 22nd August 2017

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Australia pet care company Greencross made inroads on this side of the Tasman by buying up veterinary clinics and opening retail outlets, boosting New Zealand sales by more than a fifth. 

ASX-listed Greencross, which jointly owns the Animates pet store chain with NZX-listed Ebos Group, lifted sales 21 percent to A$98 million in the 12 months ended June 30 from its New Zealand division, as the company expanded its local footprint by 35 percent, opening seven new retail sites, seven grooming sales, four in-store vet clinics and buying four other in-store vets. Sales were up 4.9 percent on a like-for-like basis. 

The expansion of Greencross's New Zealand vet business helped fatten gross margins for the Queensland-based company, rising to 49.1 percent from 48.6 percent a year earlier and 46 percent in 2015. That saw earnings before interest, tax, depreciation and amortisation climb to A$13 million up from A$10 million.

"Our New Zealand business saw continued strong growth in the year driven by strong LFL sales, continued growth in vet and aggressive network expansion," Greencross said in its annual report. "NZ retail LFL sales growth reflects the continued strength and momentum of the Animates brand in NZ while the relatively new vet business contributed LFL sales growth of 8 percent." 

New Zealand's pet industry has attracted professional investors in recent years with local private equity firm Pioneer Capital taking a cornerstone stake in local vet chain Pet Doctors NZ, which has been buying rival clinics for the past decade and advertises itself as an exit for vets looking to up sticks and sell. Other players such Veterinary Enterprises Group, or VetEnt, have branched out into a broader suite of agri-related business. 

Greencross said its New Zealand business will likely face "a more competitive backdrop in the coming year, but out integrated pet care model should prove resilient". Its like-for-like sales rose 2.7 percent in the first seven weeks of the 2018 financial year. 

The Australian group now has 39 stores in New Zealand, 23 grooming salons, nine in-store vet clinics and seven standalone vet clinics. Greencross has 239 retail stores across Australasia, 147 vet clinics and 33 specialist and emergency. 

Group net profit rose 21 percent to A$42 million on an 11 percent gain in revenue to A$817 million. Greencross's board declared a fully franked final dividend of 9.5 Australian cents per share, paid on Oct. 6 with a Sept. 8 record date. That takes the annual return to 19 cents. 

(BusinessDesk)

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