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(Sharecast News) - Advanced Medical Solutions Group updated the market on its trading on Thursday, reporting "significant progress" in a number of areas, despite the adverse impact of Covid-19.
The AIM-traded firm said it had seen improved end-sales demand for US 'LiquiBand', as well as key product approvals and launches, including the approval of LiquiBand and 'LiquiBand Fix8' in India.
Revenue was still expected to be in line with the guidance it issued in June, with coronavirus disruptions impacting group revenues by around £15m in the second quarter.
As a result, with both business units "significantly affected, and the wound care year-on-year comparator also being affected by some customers' Brexit preparations in 2019, AMS said it was expecting aggregate sales for the period to be about £39m, down from £48.7m in the first half of last year.
"Encouragingly, the Group saw the first revenue contribution from Biomatlante and, more significantly, underlying market share growth for US LiquiBand arising from sales initiatives implemented by the management team as well as the approval and launch of 'LiquiBand Rapid'," the board said in its statement.
AMS said it was confident in its long-term strategy, and had continued to invest in research and development and regulatory projects in order to be in the best position to return to growth when end markets recover.
In addition, the group said it had operated its factories at "much lower" volumes, resulting in under-absorption of its fixed costs.
As a result, the board said it was expecting to report adjusted profit before tax in the region of £5m to £6m for the period, down from £12.8m year-on-year.
The company said it remained in a "robust" financial position through the Covid crisis.
Over the course of the first half, it "tightly managed" its working capital and maintained the payment of its final 2019 dividend, and generated net cash.
At the end of the first half, AMS had net cash of £68m, up from £64m at the start of the period.
Looking ahead, AMS said it was starting to see signs of recovery in some markets, and was expecting the sales impact of Covid-19 to gradually reduce in the second half and into 2021, with both accident and emergency and elective surgery volumes recovering to more normal levels.
There was, however, expected to be "significant variability" in the pace of recovery for different geographies, and different types of surgical procedures, and with the potential for second waves of Covid-19 infection, it was still difficult to predict the full-year financial impact on the firm.
The board did say its current internal forecasts suggested that the overall impact on revenues would be about £7m in the third quarter, and £3 million in the final three months of the year.
"AMS is coping well with the demands of operating in the current environment and our priority continues to be the well-being of our staff and serving our customers," said chief executive officer Chris Meredith.
"We were pleased to see recent market share gains for LiquiBand in the US and the launch of LiquiBand Rapid in the first quarter, and with the development plan continuing for LiquiBand XL, we remain well positioned to grow sales and market share.
"Our strong balance sheet enables us to continue to invest in research and development and regulatory projects, in order to be in the best position to return to strong growth when the group's end markets recover."#
At 1504 BST, shares in Advanced Medical Solutions were down 5.14% at 232.4p.
12 Jun 2020 16:05