By Mark Shapland For This Is Money
Published: 12:29, 16 October
Convatec has seen its shares tank after the wound-dressing maker warned over full-year revenues amid supply and regulatory certification problems.
The firm, which sells products used in acute wound care and critical care, said performance in the third quarter was 'severely' impacted by supply issues at two of its divisions, and lower-than-anticipated revenue contribution from new products.
As a result, Convatec now expects full-year organic revenue growth will be between 1 per cent and 2 per cent, 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 20 per cent to 218.7p in morning trading.
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.'
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.
Patronus Partners wrote in a note: 'For such a high-profile IPO to have its growth expectations slide so soon after listing is a poke in the eye for the London market.'
Paul Kavanagh, director at Patronus, added that the 20 per cent drop is not an overreaction.
He said: 'Convatec is on a punchy rating. We hope this statement really bottoms out the extent of the problem, but the jury is still out until we see progress in the next three months,' he added. 'If there's not a bit of catch-up then 2018 forecasts could come under further pressure.'