CVS Group (LON:CVSG) shares plummeted more than 20% on Tuesday, after the company warned on profits.

The veterinary services provider said it expects earnings for the full year to fall behind market expectations as a result of rising employment costs and lower margins.

CVS Group said that for the first half of 2019, total sales increased by 23.7% and like-for-like sales increased by 4% compared to the same period a year ago.

In addition, the company said gross group margins were down to 76.2%, compared to 79.5% in 2018.

Looking ahead, CVS Group said it was in the midst of enacting various cost saving initiatives to counteract falling revenues.

The statement said:

“A number of cost savings have been identified across the Group and these are expected to generate savings both in H2 2019 and in the remainder of calendar year 2019, with ongoing effect thereafter.

In conjunction with cost savings, additional procedures have been implemented over the employment of locums in practices and the Group expects to see a reduction in locum costs in the remainder of the financial year as a result.”

CVS Group owns over 500 veterinary surgeries in the UK, the Netherlands, and the Republic of Ireland. The firm was founded back in 1999 after opening its first veterinary surgery.

Shares in CVS Group are currently down -28.16% as of 12:13PM (GMT).