Convatec falls on supply issues
The firm said its performance during the third quarter was “severely impacted” by supply problems in wound and ostomy care.
Shares in Convatec slumped on Monday after the medical supplies firm warned over full-year revenues amid “supply issues”.
The firm said its performance during the third quarter was “severely impacted” by supply problems in wound and ostomy care, and a lower-than-anticipated revenue contribution from new products.
It pointed to the movement of its Advanced Wound Care manufacturing lines from Greensboro in the US to Haina in the Dominican Republic, which resulted in delays in obtaining regulatory certification.
As a result, Convatec now expects full-year organic revenue growth will be between 1% and 2%, but the figure is “dependent on the degree of success in resolving remaining supply issues, fulfilment of back orders and recovery of orders” in the fourth quarter.
Shares in Convatec, which listed only last year, slumped more than 14% to 241p in morning trading.
This was despite third-quarter revenue showing a 6.8% uptick to 444.5 million US dollars.
Boss Paul Moraviec said: “I am disappointed that our performance in the third quarter was severely affected by supply issues in both Advanced Wound and Ostomy Care and a lower-than-anticipated revenue contribution from new products, leading to a reduction in our full-year organic revenue growth expectations.
“We understand the operational issues we need to address, and are determined to drive performance and to deliver margin improvement in the future.
“However, given what we have experienced in the third quarter, we are reviewing the financial implications for growth and margins in full year 2018 and will provide further guidance at our preliminary results in early 2018.”