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(Alliance News) - Surgical Innovations Group PLC on Tuesday said it swung to a loss in the first half of 2019, hit by higher expenses and lower-than-expected orders in the second quarter from the UK and Europe, triggering a cut to guidance.
Shares in Surgical Innovations were down 10% at 1.80 pence in London in late morning trade.
The medical technology firm posted a GBP326,000 loss for the six months ended June 30, reversing its GP94,000 profit a year before.
A significant portion of this loss was down to other operating expenses, which rose 14% to GBP2.4 million from GBP2.1 million. Another contributor was revenue, which declined 3.8% to GBP5.1 million from GBP5.3 million thanks to a drop in orders in some regions.
"The year began positively, but this momentum was not carried into the second quarter as orders in the UK and Europe were lower than expected," said Surgical Innovations. US and Asian markets revenue grew as predicted, however.
The company does not expects the headwinds experienced in the second quarter to ease in the short term, with the UK and Europe likely to stay challenging. The US market is expected to continue to remain robust though.
Nonetheless, Surgical Innovations has altered its outlook and cut its revenue expectations. As such, the firm only forecasts "relatively modest growth in the second half of 2019 compared to the first half". Adjusted operating profit, which fell to GBP220,000 from GBP420,000, is also set for a much smaller increase in the second half than previously expected - though the company will remain cash generative, it said.
Cash at June 30 stood at GBP340,000, down 11% from GBP380,000 at the end of 2018.
Surgical Innovations Chair Nigel Rogers said: "We have continued to adapt to challenging circumstances, which are both industry-wide and transitory in nature. Whilst trading conditions in the short term are very disappointing, the investment made in people and products position us well to take advantage of market opportunities. Our executive team has been strengthened, and has the drive, expertise and experience to achieve future success."
