Trading at Tristel (TSTL), a manufacturer of infection prevention products, has been at the mercy of what the company described as “two powerful countervailing forces”.
On the one hand, the Covid-19 outbreak has resulted in a surge of demand for its hospital surface disinfection products from March through to the end of June. By contrast, a fall-away in the number of standard hospital procedures brought about by the lockdown restrictions has constrained demand for the group’s medical device decontamination products. This had accounted for 80 per cent of total sales in the eight-month period before the most acute phase of the pandemic, during which time the proportion fell to 61 per cent.
Sales for surface disinfection products had been running at 9 per cent of the group total prior to the acute phase, when they quickly ratcheted up to 27 per cent. In brass tacks, it meant a temporary reduction of £500,000 in medical device decontamination sales, more than mitigated by £2m in additional sales of the surface disinfection products. In those past four months, global sales for the group were 30 per cent above the comparable period in FY2019.
Tristel had been looking to drive product sales under the Cache brand even prior to the outbreak because hospital disinfectants form part of a much larger addressable market than medical devices – more room to grow, as it were. The group also achieved record sales figures across many of its locales, with sales in France tripling to reach £1.75m.
So it is curious why the share price slumped on the release of the full-year trading update. We can probably assume that a lot of positive sentiment is priced in given that the group rates highly in terms of quality and momentum.
