The Zoono Group Ltd (ASX: ZNO) share price is under pressure on Thursday.
In afternoon trade the biotech company’s shares are down 7% to 73.5 cents.
This leaves the Zoono share price trading within touching distance of its 52-week low of 71 cents.
Why is the Zoono share price under pressure?
Investors have been selling Zoono shares following the release of its half year results.
For the six months ended 31 December, the company reported a total revenue of NZ$14.4 million and a net profit before tax of NZ$2.7 million. This compares very favourably to revenue of NZ$1.9 million and a loss before tax of NZ$0.7 million a year earlier.
Zoono’s growth was driven by increased demand for its anti-microbial solutions because of COVID-19. It is worth noting that the prior corresponding period was before the emergence of COVID-19.
COVID-19 tailwinds and headwinds
Interestingly, COVID has both benefitted and hindered its performance. While it is highly unlikely that its sales would have reached this level without a pandemic, negative COVID impacts have restricted its sales growth.
Management explained: “While the Company has, overall, undoubtedly benefited from the impact of the COVID-19 pandemic, in many respects, the opposite has been the case in the review period in that the disadvantages have outweighed the benefits. Confidence in and around the workplace has been adversely affected and, with the Company’s business being primarily focussed on the B2B sector, several major supply agreements have been put on hold or deferred simply because either the businesses or the buildings housing them (or both) have been closed and/or the employees not at work.”
Management estimates that these negative impacts total NZ$6 million to NZ$7 million.
Possibly weighing heavily on the Zoono share price today is its outlook for the remainder of the year.
Despite its strong revenue growth in the first half, management isn’t expecting its full year growth to be as explosive. It is merely aiming to surpass last year’s revenue.
Zoono’s Managing Director and CEO, Paul Hyslop, commented: “We are very pleased with the momentum we were able to maintain throughout the first half of the financial year. Moving forward, our focus will continue to be the B2B markets in the Americas, UK/EU, China/ASEAN and MENA/India.”
“While the home markets of NZ and Australia are important, the sales volumes available in the larger off shore markets demand that Zoono continues to aggressively go pursue new business globally. We remain confident of delivering a year-end revenue result that surpasses last year.”