Tristel starting to see signs of market recovery
Infection prevention products manufacturer Tristel said in a trading update on Wednesday that as the fourth quarter progressed, demand for its device-based products accelerated as hospital outpatient departments gradually returned to pre-pandemic levels of activity.
The AIM-traded firm said surface disinfectant product sales had also continued to grow.
It said it expected that the upturn in sales activity, combined with a gross margin maintained at 80% and “tight control” over operating costs, would translate into sales of £31m, compared to £31.7m a year earlier, and pre-tax profit of £5.5m for the year, down from £7.1m.
Tristel noted that in 2017, it made an equity investment in a medical device company focussed on women's health.
It said the investment led to a close collaboration between the two companies, which had been a “key influence” in the development of its ‘3T’ app, and new product development initiatives that were underway involving artificial intelligence (AI), and for which several patent applications had been made.
The company's shareholders had initiated a sale process for the business to enable the technology to find a home within a larger medical device company with the resources to succeed in the United States market.
Tristel said the process had not been successful to date, adding that while it continued to operate as a going concern, it would take a conservative approach to the carrying value of the investment, totalling £0.8m, and fully impair that in the financial year just ended.
That expense was non-cash, and would be recorded as an exceptional item.
Additionally, as it announced on 24 June, Tristel succeeded in gaining its first regulatory approval in Canada for the ‘Duo OPH’ disinfectant for ophthalmic devices, and an enhanced approval for additional efficacy claims from the US Environmental Protection Agency (EPA) for the ‘Jet’ surface disinfectant product.
A more detailed update on the progress of the US Food and Drug Administration (FDA) submission for Duo ULT for ultrasound probe disinfection, and the commercial development plan for North America, would be provided with the final results in October.
The company's cash position as at 30 June was £8m, compared to £6.2m a year earlier.
Tristel’s board said it had committed to declare a final dividend of 3.93p, making for a total of 6.55p for the year.
That distribution level represented a one-off divergence from its stated dividend policy of 2x cover.
Looking ahead, Tristel said that towards the end of the financial year, it observed an increase in hospital admissions and patient examinations.
It said it was confident that sales and profit growth would resume this year, adding that the investments it had made in staff, systems and new market registrations would “lay the foundation” for growth going forward.
“The second half of the year was a frustrating period for the company,” said chief executive officer Paul Swinney.
“Since spring 2020, our ordinarily stable and predictable business has been disrupted by both Brexit and the pandemic.
“We have waited for signs that healthcare provision in our main 25 markets would return to normal, and finally we are seeing signs of this occurring.”
At 1407 BST, shares in Tristel were down 4.85% at 628p.