Muted optimism that seasonal revenue growth could claw back some of the margin erosion reported in the first half at ConvaTec (CTEC) has disappeared after another profit warning. Annual operating margins are now expected to be between 23 and 24 per cent, down from the previous guidance (24 – 25 per cent) and 28 per cent just two years ago.
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Management say the problem is that the largest customer in the Infusion Devices franchise has changed its inventory policy, meaning fourth quarter revenues will be between $18m (£14m) and $23m lower than expected. But there are also ongoing challenges in the large Advanced Wound Care business, where annual like-for-like revenue growth is now expected at just 0.8 per cent.