We’ve covered the evolution of Leeds, UK-based minimally invasive surgical device manufacturer Surgical Innovations with interest, and now the publicly quoted company has given us more to talk about with a thought-provoking set of six monthly financials. Sticking out like a sore thumb is the drop off in sales of OEM products, but the company assures us this is only a timing issue which we’ll see reversed by orders in house for shipment in the next period.
In essence the bottom line has continued to perform strongly in spite of a reportedly timing-related drop off in sales to OEM customers of 28.5% compared with the equivalent period last year. The company is sounding sanguine about what looks like a significant decline, suggesting that it is not in any way a sign of a struggling business, but rather a matter of timing, citing significant in house orders for shipment during the next period as justification for its claim that it’s just the way the business has crystallised in the past six months.
The silver lining is that sales of higher margin own-branded products have more than offset the OEM shortfall. The mix change has especially impacted the bottom line where EBITDA is up by over 10% and operating profit up 2.5%.
And indeed it looks like the company has reasons to be cheerful as it looks forward to the impact of new US approvals for some of its products and distribution agreements with CareFusion for the Pretzelflex® laparoscopic retractor and Integrated Medical Systems for YelloPort+plus™
Commenting on Outlook, Doug Liversidge, Chairman, said: “Despite challenging markets we remain confident about the future growth prospects of the business as our existing SI branded products continue to gain international clinical recognition and offer an attractive value proposition to clinicians in these times of austerity. We expect to see further growth from new products that are launched throughout the year, as well as through the development of existing and new relationships with OEM customers. With booked orders for the rest of the year already surpassing last year’s full year revenue levels we have great confidence in delivering further growth in the current financial year.”