KUALA LUMPUR (Dec 12): Rhone Ma Holdings Bhd’s subsidiary has received an amended agreement to stop distributing multinational animal health company Merial’s swine, poultry, ruminant and veterinary public health products.

In a filing with the stock exchange, Rhone Ma said its subsidiary Rhone Ma Malaysia Sdn Bhd (RMM) is the distributor of Merial products, comprising products for swine, poultry, ruminant and companion animals, as well as veterinary public health products.

Pursuant to the amended agreement, RMM will continue to distribute Merial's companion animal products.

As for Rhone Ma’s remaining inventory of the excluded products, Merial, its affiliate or any nominated designated third party has the sole discretion to repurchase in accordance to criteria specified in the amendment.

In the event whereby Merial decided not to repurchase the excluded products, RMM will, to its best efforts, sell all its remaining inventory for the period up to Dec 31, except for poultry products which is for the period of up to March 30 next year.

“The amendment is not expected to have any material impact on the earnings of the group for the financial year ending Dec 31, 2017 (FY17), but is expected to have a negative financial impact to the group for FY18,” the filing read.

In FY16, sale of the excluded products supplied by Merial collectively contributed approximately 31.54% and 47.77% of total revenue and profit before taxation, which excludes one-off charge of listing expenses, which amounted to approximately RM4.14 million of the group.

Rhone Ma will mitigate the negative financial impact by exploring distribution options for their  poultry, swine and ruminants products, with other major international suppliers of animal health products.

The group will increase efforts to market and sell other products, particularly in-house manufactured products, and expand market share in regional markets with growth potential.

“The company also anticipates that upon completion and operation of its new warehouse and GMP-compliant plant, the company will be able to increase the volume of production and sales of its own animal health products,” the filing added.

As at 2.37pm, shares in Rhone Ma fell three sen or 3.45% to 84 sen, valuing the company at RM139.44 million.