Half-year profits decline at Mediwatch as costs bite
HALF-YEAR pre-tax profits have almost halved for Warwickshire medtech Mediwatch, dropping from £130,000 this time last year to £67,000 for the six months to the end of April.
The Rugby company, which manufactures urological diagnostic equipment, had warned in May that rising manufacturing and component costs had put the squeeze on margins.
Nevertheless, in the six month period to April 30, 2011, the group was able to grow turnover to £5.095m, which compares with £4,96m this time last year.
Revenue remained equally split with almost 50% from the United States and 50% from Europe and the rest of world. The trend is the same as last year.
The group achieved an EBITDA of £272,000 during the six months, down on the £290,000 recorded in the same period last year.
In an interim results statement today, the firm said: “As previously reported, gross margins have come under pressure due to increases in component and manufacturing costs and increased industry competition. This has led to a reduction of gross profits by approximately 1% when compared to the second half of 2010.”
It said that in a concerted effort to improve margins, management was implementing measures aimed at reducing manufacturing costs. In addition, it said it would continue to reduce overheads. Current levels are 11% below that of the second half of 2010 and the firm said it expected this to continue for the rest of the financial year with a subsequent impact on savings.
Omer Karim, Mediwatch chairman, said: “During the first six months the group has been able to implement cost reduction programmes in production, bring some R&D projects to completion and increase marketing efforts while controlling costs.
“The group continues to explore opportunities to build the existing business as well as find additional products to add to its product mix and to broaden its offerings in the service sector.”
In outlook, the firm said it was hoping to boost performance by securing additional umbrella purchasing agreements with buying groups in the US, while it would also be trying to take advantage of new opportunities in China.
To support its emerging markets strategy the firm has appointed a new distributor in Beijing and Hong Kong. A specialist company has also been appointed to obtain regulatory approvals for this market, which will take from 12 to 18 months. Mediwatch is also exhibiting at the Chinese urology congress in October 2011 as part of the pre launch preparations.
