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ConvaTec sees profits jump by over a third in first half

The FTSE 250 medical products company recorded an operating profit for the period of US$122mln, a 31.5% increase on the same period last year
Medical equipment
Revenues in the first half also jumped 10.8% to US$921.3mln

ConvaTec Group PLC (LON:CTEC) reported a profit increase of over 30% in the first half of the year as revenues climbed over 10% year-on-year.

The FTSE 250 medical products company recorded an operating profit (EBIT) for the period of US$122mln, a 31.5% increase on the same period last year, while revenues climbed 10.8% to US$921.3mln.

READ: ConvaTec 2017 profits fall on supply issues and lower sales of new products

The group also saw revenue growth across all of its divisions, with Advanced Wound Care, Ostomy Care, Continence & Critical Care, and Infusion Devices rising 6.6%, 4.4%, 25.7%, and 12.2% respectively in the period.

The interim dividend was also raised to 1.717 cents from 1.4 cents in the same period a year ago.

ConvaTec also provided an update on its backorder catalogue, which ti said had returned to normal levels.

The results will be a positive sign for investors as the firm seeks to perform better than 2017 when it suffered a 3.3% decline in profits as supply issues and low sales of new products dragged on earnings.

In its outlook, the company left it expectations unchanged, forecasting organic revenue growth of between 2.5%-3% for the full year and an adjusted EBIT margin of between 24%-25%.

Paul Moraviec, group chief executive of ConvaTec, said that the company had delivered “a solid performance and made good progress in many areas” in the first half.

He added that despite strong demand for new products in the firm’s advanced wounds divisions being offset by headwinds against some older products “recent positive trends and early results from…growth initiatives” meant the group was confident of an improved performance in the division in the second half.

In a note to clients, analysts at City broker Numis upped their target price for the group to 220p from 180p, noting that the appointment of Stephen Bonnelycke from US health products company Hollister Inc as president of the ostomy division, in addition to the previous appointment of Sten Scheibye as non-executive director, were strong hires who could revive the division which had underperformed in recent years.

In mid-morning trading, ConvaTec shares were up 3.9% at 229p.

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ConvaTec Group PLC Timeline

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