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(Sharecast News) - Alliance Pharma updated the market on fourth quarter trading on Wednesday, reporting that the expected recovery in some of its demand was happening more slowly than anticipated.
The AIM-traded firm said in its interim results on 20 September that its expectations for the current financial year included several large distributor orders in the fourth quarter, with the timing of those orders dependent on the rate of recovery in the markets.
It said that while the consumer market demand for 'Kelo-cote' in China had been strong, the business-to-business market demand was recovering more slowly than it or its distribution partners expected.
Sales were also being impacted by a one-off destocking effect.
As a result, some of the larger fourth quarter orders it referred to in its interim results statement would not materialise, but overall, Alliance Pharma said the rest of the business was trading in-line with its expectations.
Assuming no change to the underlying operating environment, the board said it now expected revenue for the year ending 31 December would be at least £170m, with underlying profit before tax of at least £30m and free cash flow of at least £15m.
That would result in year-end leverage of about 2.5x, "comfortably below" its banking covenants of 3.0x.
The company said it was "confident" that the business-to-business market for Kelo-cote would recover to pre-pandemic levels during 2023, which, combined with continued strong growth in consumer sales, left 2023 Kelo-cote expectations unchanged.
"Whilst 2022 has presented challenges to Alliance through Covid-related lockdowns in China and supply chain disruptions, the underlying business remains robust and the board remains confident in achieving our medium-term revenue and profit targets," said chief financial officer Andrew Franklin.
In a separate announcement on Wednesday morning, Alliance Pharma also said that chief executive officer Peter Butterfield was taking time away from the business "for personal reasons", and was expected to return in January.
It said CFO Andrew Franklin had assumed Butterfield's CEO responsibilities, in line with its established resilience plans, with support from the head of finance and the wider leadership team.
At 1257 GMT, shares in Alliance Pharma were down 34.24% at 40.05p.
Reporting by Josh White for Sharecast.com.
