Colostomy bags maker, ConvaTec Group PLC (LON:CTEC) reported a 3.3% decline in 2017 profit, reflecting supply issues and lower-than-expected sales from new products.
The British medical devices company, which also makes catheters, said adjusted operating profit dropped to US$456.8mln from US$472.2mln a year earlier.
READ: ConvaTec lowers revenue guidance after supply issues hit third-quarter performance
The supply issues related to its advanced wound care and ostomy care business.
While these issues have been resolved, ConvaTec expects an ongoing impact on performance in 2018, particularly in the first half, as a result of backorders in Ostomy and lost orders.
However, organic revenue rose 2.4% to US$1.76bn, slightly above its expected guidance range of 1-2% growth.
ConvaTec sees return to 'market levels' of revenue growth
The company expects organic revenue in 2018 to rise 2.5-3% but sees the underlying earnings (EBIT) margin falling due to its decision to increase targeted investment.
Investments in 2018 will include expansion in China, the US and selected European markets, as well as research and development, data analytics and IT infrastructure.
“We expect to return to market levels of revenue growth in the medium-term and we continue to see further structural margin expansion opportunities, although progress will be delayed as we address the factors that negatively impacted on our 2017 performance,” said chief executive Paul Moraviec.
The group resumed its dividends with a payment of 5.7 cents for the year, in line with its policy for a payout ratio of 35% of adjusted net income.
Shares rose 5.4% to 197.6p in morning trade.