Join our community of smart investors

Consort drops on shock warning

The medical devices company has fallen victim to a number of delays at its Bespak division
December 4, 2018

Shares in Consort Medical (CSRT) plummeted in the wake of a surprisingly weak set of half-year results and a shock profit warning. The group’s Bespak division – which develops products such as inhalers – was the main culprit, growing sales by just 1.7 per cent (compared with a 5 per cent consensus estimate) after global generic group Mylan delayed the launch of its copy of GSK’s asthma drug Advair. Even worse, a "significant inventory build-up" means Mylan’s demand for Consort’s products is expected to fall significantly.

IC TIP: Sell at 765p

Development and manufacturing arm Aesica also suffered, with revenues down 2.4 per cent as growth across the Italian and German businesses was offset by lower active pharmaceutical ingredient (API) sales. That said, both Bespak and Aesica grew operating profits thanks to tight cost control, particularly in the Aesica cost base. Lower finance costs and a lower pension finance charge also helped explain a 6.1 per cent improvement in adjusted pre-tax profits to £19m.

Management expects Mylan delays to have a £3m adverse effect on pre-tax profits this year, prompting broker Numis to plan a 7 per cent downgrade to its FY2019 pre-estimate and 9 per cent cut to EPS. Consensus estimates currently rest at £38.8m and 64p (from £38.2m and 65p in FY2018).

CONSORT MEDICAL (CSRT)  
ORD PRICE:765pMARKET VALUE:£378m
TOUCH:765-770p12-MONTH HIGH:1,294pLOW: 755p
DIVIDEND YIELD:2.8%PE RATIO:22
NET ASSET VALUE:500p*NET DEBT:39%
Half-year to 31 OctTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20171547.514.27.44
20181539.615.67.60
% change-1+28+10+2
Ex-div:17 Jan   
Payment:15 Feb   
*Includes intangible assets of £173m, or 351p a share