Efforts by replacement hip and knee maker Corin to boost sales through product revamps are producing encouraging results and, although higher marketing spend dampened the impact on the bottom line, underlying operating profits still more than doubled to £1m in the latest half year.
The key success in the first half was the strong growth in sales of Corin's cementless hip-replacement products, which were launched in 2010. This more than offset falling sales of older products and overall hip sales were 38 per cent ahead at £15.9m. Knee sales were less good, dropping 5 per cent to £3.5m. But the real potential for this division is from the company's new Unity knee-replacement product, which is due to be launched next year. The product will address 60 per cent of the global knee market rather than the 10-15 per cent addressed by existing products.
Gross margin improvements, thanks to increased direct sales, were offset by higher investment in marketing in the US and Japan. Meanwhile, a stocking order for a robotic orthopaedic system has now been fulfilled, which will mean a drop in second-half sales.
Broker Numis Securities forecasts full-year pre-tax profits of £1.6m and EPS of 2.6p, surging to £3.3m and 5p, respectively, in 2013 (£1.9m and 2.9p in 2011).
| CORIN (CRG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 56p | MARKET VALUE: | £24m | |
| TOUCH: | 55-57p | 12-MONTH HIGH: | 60p | LOW: 35p |
| DIVIDEND YIELD: | Nil | PE RATIO: | 17 | |
| NET ASSET VALUE: | 65p | NET DEBT: | 16% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 21.8 | 0.22 | 0.23 | 0.48 |
| 2012 | 25.0 | 0.86 | 1.69 | nil |
| % change | +15 | +285 | +635 | - |
