Half-year results impacted by temporary downtime in US manufacturing for radiation firm

A radiation detection technology company with a Huddersfield has seen revenues drop and pre-tax losses widen in the six months to October 31 2018, caused by a temporary downtime in its US manufacturing while the facility was relocated.

Kromek this morning published its half-year results, which show that revenue was £3.7m in the period, down from £4.8m in the same period in the previous year and pre-tax losses were £2.1m (H1 2017/18: £1.8m loss).

However, Kromek’s gross margin increased to 67% (H1 2017/18: 63%) and operating costs reduced to £4.6m (H1 2017/18: £4.8m) and its outlook remains positive and unchanged. 

Krimek said the decrease compared with the first half of the prior year was due to the temporary downtime in manufacturing in the US as a result of the relocation of the US facility. The firm added: “Consequently, some of the production that was initially scheduled for H1 2018/19 has moved to the second half and therefore, combined with the orders already due to be delivered in H2 2018/19, the Group remains on track for achieving revenue growth for the full year 2018/19 in line with market expectations.

“Due to the lower level of production during the period, there was a shift in revenue mix between product sales and revenue generated by R&D contracts.

“However, as manufacturing increases following the successful relocation of the US facility, product sales are expected to account for a greater proportion of revenue for FY 2018/19.”

Kromek’s outlook for FY 2018/19 remains unchanged – on track to achieve revenue growth and EBITDA profit in line with market expectations

In the period, the firm relocated Kromek’s US manufacturing operations to new premises in Pittsburgh, which was purpose-built to be a high-volume manufacturing site for SPECT cameras and other medical imaging products

It also had a very strong period of winning contracts, with increased revenue visibility for the current and next financial year. 

Its Medical Imaging division was awarded a $700,000 contract by a new OEM customer in the nuclear medicine instrumentation market, received a $340,000 repeat order from an OEM customer in the Bone Mineral Densitometry market and won a five-year repeat order, worth $1.2m, from an existing medical customer for the supply of gamma detector module. 

 The Nuclear Detection division was awarded two contracts in the US by DTRA, worth a total of $2.9m and won several new customers in the nuclear sector, including the Spanish Army, and added new distributors in Europe and Asia.

Its Security Screening division was awarded a two-year $1.5m contract by the US Department of Homeland Security to develop CZT detector modules for commercial off-the-shelf detectors for advanced X-ray systems for passenger baggage screening 

Three new patents were filed and four were granted during the period.

Dr Arnab Basu, CEO of Kromek, said: “The progress of 2017/18 was sustained into the current fiscal year as Kromek remained at the forefront in developing solutions to combat some of the greatest security and health challenges that are faced by society today. Our position has been strengthened by our new state-of-the-art facility in the US, which is designed to be a world-class manufacturing base for the production of medical imaging products including SPECT cameras. During the six months, we undertook a significant process of relocation, installation and revalidation of our manufacturing processes, and I’m delighted that the facility is now fully operational.

“Over the last three fiscal years we have won $80m of contracts, across all of our core sectors, demonstrating the successful conversion of our growing order pipeline. They also demonstrate the strong and long-lasting partnerships that we are continuing to build with our commercial and large government customers across the globe.

 “As we continue to deliver on existing contracts as well as win new orders, our visibility of revenue for the next six to 24 months continues to increase, which includes visibility of approximately 86% of the forecast revenue for 2018/19. As a result, the Board is confident of delivering full year revenue growth and positive EBITDA, in line with market expectations.”