Scapa trades in line as it recovers from loss of ConvaTec contract
Scapa Group reported 14.3% growth in revenue in its half-year results on Tuesday, to £160.8m, or 10.4% growth on a constant currency basis.
The AIM-traded firm said its trading profit fell 17.0% for the six months ended 30 September to £14.2m, or 20.7% on a constant currency basis, which represented a trading profit margin reduction to 8.8% from 12.2% year-on-year.
Its reported operating profit fell to £0.1m from £10.5m, which the board said reflected the impact of the loss of the ConvaTec contract.
Adjusted earnings per share were down 15.7% to 7.0p, while underlying cash flow from operations improved to £18.9m from £13.4m.
Scapa said it had net debt of £69.7m at period end, up from £55.7m, which included anIFRS 16 impact of £8.6m.
Its pension deficit was reduced to £6.4m from £8.4m at the start of the period.
Scapa did note that it was successful in its motion to dismiss ConvaTec's claim filed in May in the New Jersey federal court.
It said its claim against ConvaTec in Connecticut for damages in excess of $83m had been filed.
“We are pleased to report a resilient financial result in the first half of the year, despite the significant impact of the loss of the ConvaTec contract,” said group chief executive Heejae Chae.
“We have delivered strong revenue growth and made good progress on our operational footprint plans for integrating and streamlining the business.”
Chae said the company anticipated that the second half of the year would benefit from new products and technology transfers from new and existing customers.
“In the medium-term, we expect our operating leverage to unwind as we realise the value from our strongest-ever pipeline.
“Whilst the macro environment remains challenging in some of the markets in which we operate, the board remains confident of achieving its full year expectations.”
At 1223 GMT, shares in Scapa Group were up 1.98% at 234p.