Warwickshire medtech Mediwatch issues profits warning on sluggish markets
WARWICKSHIRE medtech firm Mediwatch has warned its full-year profit levels are likely to be materially lower than market expectations due to the company’s depressed markets.
In a trading update ahead of its final results the Rugby-based firm said: “Mediwatch’s major markets in Europe and the USA continue to suffer from economic turbulence. Normally the last quarter is seasonally high with European distributors stocking up ahead of their end of fiscal year peak as well as strong sales in the USA ahead of the end of their fiscal year end.
“However, this year has seen activity at a lower level reflecting the weakness in these markets. Some of the sales have been delayed into the next year and the directors believe the group is well placed to pick up these sales.
“In addition, there were some large tenders for equipment needed for drugs trials which, if won, would have had an immediate effect on the results for the year to October 31, 2012.”
Unfortunately, it said two of these had been lost due to undercutting from competitors and the remainder have been delayed into 2013. Additionally, it said areas such as the Middle East, as indicated at the half year, had also been weaker than expected.
“There have been significant cost savings, however, the need to drive sales in a very sluggish and difficult market has seen selling expenses at a higher level than expected.
“The group expects a profit after tax for the year ended October 31, 2012, but at a level materially lower than market expectations,” it added.
It said there had been some positives, particularly with the expansion of the group’s geographical footprint. In addition, the firm has successfully launched new tablet computer-based products (ultrasound scanners, uroflowmetry and pelvic floor rehab) which have been well received and seen an increase in sales.
The firm said the outlook for 2013 remained positive with innovative new products expected to be launched and the full benefit of the cost savings and restructuring of the business impacting business during the year.
In addition, it said plans to open a new office in China would boost business in a vital new market, while it remained on the lookout for suitable acquisitions and joint venture opportunities in both the UK and United States.
