Gold Coast business: Veterinary group National Veterinary Care labelled ’recession proof’ by boss Tomas Steenackers

‘Fur babies’ are the focus for one Gold Coast company that is growing quickly in a difficult economic climate.

Veterinarian Peter Elliot, of Vetcall Ashmore, is part of the National Veterinary Care network. He is pictured with Max. Picture: Jerad Williams

NATIONAL Veterinary Care boss Tomas Steenackers hates to say his industry is almost “recession proof”.

The managing director of the fast-growing veterinary group is more cautious than bullish about his company’s prospects.

However, after yesterday’s results he may be a little more comfortable using the phrase.
That’s because in a relatively bleak retail and economic climate, the Ormeau-based business reported full-year revenue grew 43.6 per cent in FY19 to $118.4 million.

Its net profit increased 28.9 per cent to $8 million and underlying pretax earnings — which strip out one-off items — soared 37.7 per cent to $18 million. Analyst Shaw and Partners in a note to investors said both revenue and underlying earnings exceeded expectations.

Consumers have proven reluctant to cut back on spending on their “fur babies”.

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Mr Steenackers said consumers were not cutting back on spending on their “fur babies” despite the difficult economic climate.

“You go to Robina to shop and you can see sales at 50 per cent off,” he said.

“Retailers have felt the pressure but based on revenue growth of 43 per cent, I don’t want to say it, but it is almost recession proof.”

Mr Steenackers said consumers would cut back on luxury items than skimp on spending for the health of their pets.

National Veterinary Care owns and operates veterinary clinics in Australia and New Zealand. Managing director Tomas Steenackers with Chevy, a one-year-old male, at their Yatala clinic. Picture: Glenn Hampson

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In February NVL forecast an operating margin of between 14.5 and 15 per cent. Yesterday, the company announced it had exceeded that figure with a result of 15.4 per cent.

“We haven’t seen the (expected) softness in the market,” Mr Steenackers said.

“That’s why I was quite nervous to revise the guidance in the first half. But as you can see at 15.4 per cent we have beaten guidance and I’m pretty happy the margin has improved.”

NVL undertook a massive expansion of its presence in the NZ market when it acquired the Pet Doctors Group, consisting of 23 clinics and two training centres for nurses.

The deal was funded through a share placement that raised $18 million as well as cash and debt.

Mr Steenackers said the business was going through a consolidation phase, with investment in back office support systems paying off.

Consumers have proven reluctant to cut back on spending on their “fur babies”.

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“All the things that we’ve been building for during past four years have been working in our favour such as the investment we’ve made in the support office and the staff and systems.”

Mr Steenackers said the focus now is on organic or like-for-like growth rather than acquisitions.

“Organic growth was a bit soft this year at 1.58 per cent. I’m not disappointed, when you buy 36 clinics everyone has focused on that,” he said.

“This year we want to get back to normal organic growth of the high twos or mid threes for the business.”

Mr Steenackers said the company will look to acquire a further eight to 10 clinics for the remainder of the year.

He said consolidation of smaller clinics into larger ones was another focus.

“We will look at smaller clinics in terms of what we can do to bring them into a bigger clinic. “We know that is more stable and the staff are better supported at a bigger clinic.

“We did that on the Gold Coast earlier this year. We brought a small clinic next door to one clinic. We closed the small one and merged them together. That is a really good strategy.”

NVL is forecasting underlying revenue of $140 million in FY20 with an operating margin of between 15.5 and 16 per cent.

Shares closed yesterday up 10¢, or 4.1 per cent, at $2.50.