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(Sharecast News) - Medical technology developer Surgical Innovations updated the market on its trading on Wednesday, projecting a promising outlook for the rest of the financial year ending 31 December.
The AIM-traded company said that while it had faced some challenges, particularly in manufacturing and supply chain disruptions, it remained optimistic about meeting its revenue and profit goals for the year.
It indicated that its forward-looking order book remained robust, bolstering confidence that 2023 revenues would align with the board's expectations.
The business in the UK had continued to outperform last year's numbers, driven in part by a focus on sustainability.
Key international markets for the company, notably Japan and Europe, also remained strong.
New markets were slowly starting to show promise, although growth had been slower than initially anticipated.
Despite the positive sales outlook, Surgical Innovations acknowledged ongoing challenges in manufacturing productivity and supply chain operations.
Those issues were first highlighted in its June update, and were expected to affect profitability in the second half of 2023.
In response, the company initiated a comprehensive operational review, led by an industry specialist, aimed at boosting efficiency and productivity.
While some corrective measures had been introduced, their full impact on profit margins would take time to materialise, the board explained.
The firm had also implemented a series of planned price increases, some of which would be gradually introduced due to existing contractual agreements.
As a result, the board said it expected a modest profit at the adjusted EBITDA level for 2023, with better momentum anticipated in next year.
In anticipation of those challenges, Surgical Innovations said it had maintained higher levels of inventory during the first half to ensure stable service levels for customers.
The company said it was planning to reduce stock levels in the latter half of the year, which was expected to positively impact cash resources.
Virgin Money UK, the group's lender, had shown support by agreeing to a waiver for the debt service covenant test for the second quarter of 2023.
As at 31 August, the Group reported £2.3m in available headroom, which included a £1m undrawn invoice discounting facility.
That available capital was deemed sufficient to support projected revenue growth for the second half of the year and beyond.
"The company announced in May that Jon Glenn would succeed Nigel Rogers as chairman at the time of the announcement of interim results in September," the board noted in its statement.
"As the transition of responsibility as chair has been conducted smoothly, the board now considers it appropriate for Jon to take on the role of chair with immediate effect.
"Nigel has reiterated his commitment to remain on the board as an independent non-executive director until a suitable candidate to succeed him has been appointed."
Surgical Innovations said it would release its interim results for the six months ended 30 June on 19 September.
At 1317 BST, shares in Surgical Innovations Group were down 15.56% at 1.52p.
Reporting by Josh White for Sharecast.com.