Hip and knee maker Corin could not escape from the drag on the world healthcare market as a combination of budget cuts and a potentially damaging clinical debate over its LARS artificial ligament product in Australia kept underlying operating profits flat at £2.5m. In addition, investors won't see a final dividend as management has decided to use the cash to fund capital expenditure in support of the Unity knee product, which removes another reason to hold the shares.
The initial success of LARS saw become Corin's biggest market by sales, but a clinical furore over the failure of several LARS ligaments in the knees of high performance athletes prompted an underlying sales decline there of 9 per cent to £12.5m. The UK market was also weak with NHS reforms throwing the elective surgery timetable out of kilter and sales fell by 6 per cent to £8m. But Corin did make progress entering the US market by clearing the last regulatory hurdles for its Trinity cup hip product, as well as starting sales through its marketing partner MAKO. This had an immediate impact with US revenues up 308 per cent at £8.7m. Corin also terminated its restrictive partnership agreement with Stryker for the Cormet re-surfacing product.
Investec is reviewing its forecasts but prior to these results the broker was predicting pre-tax profits for 2012 of £2.9m, giving EPS of 3.7p (2011:£2.3m/EPS 2.9p)
CORIN (CRG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 49.5p | MARKET VALUE: | £21.2m | |
| TOUCH: | 48.5-50.5p | 12-MONTH HIGH: | 59p | LOW: 36.5p |
| DIVIDEND YIELD: | 0.97% | PE RATIO: | na | |
| NET ASSET VALUE: | 65p* | NET DEBT: | 21% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 37.0 | 4.08 | 6.49 | 1.38 |
| 2008 | 39.8 | -4.21 | -9.48 | 1.38 |
| 2009 | 40.6 | 0.89 | -0.56 | 1.38 |
| 2010 | 42.9 | 1.06 | -0.85 | 1.38 |
| 2011^ | 47.9 | 1.51 | -0.74 | 0.48 |
| % change | +12 | +42 | - | - |
Ex-div:- Payment:- *Includes intangible assets of £5.1m, or 12p a share ^Interim dividend only | ||||
