Lidco warns on profit

Cardiovascular monitoring group Lidco disappointed with its trading update on Monday after revealing that annual growth in both revenues and profits is expected to be below its previous expectations. Group revenues in the first half are expected to total £3.7m against £4.2m a year earlier, which the AIM-listed company blamed on the slowdown of recent destocking in the UK and a lack of sales to its distributor in Japan. Although the company's installed base grew by 33 surgery monitors in the first half, revenues in the UK are now expected to be £2.6m, compared to £3.1m in the comparative period. Lidco explained that the UK market has seen a "noticeable shift" from capital sales to placement of monitors, together with a level of overstocking of disposables in the prior period, when the company experienced 59% growth in surgical disposables. UK surgical disposables sales were on par with last year at 11,000 units. In the US, revenue jumped more than 40%, while sales to the distributor in Japan are expected to restart in the second half. The group explained that the fall in revenues has been partly mitigated by improved disposable pricing and tight control in overheads. The company still expects to show growth in profitability year-on-year. Chief executive officer Terry O'Brien said: "Whilst we are disappointed with the lack of growth in UK surgical disposables and the shift from capital sales of monitors to placements, the fact that we have increased the installed user base by 33 units bodes well for the return to growth of our higher margin disposable product. The over 40% uplift in US sales demonstrates the effectiveness of our strategy in that key market and we hope to build on this further."We still expect this to be a year of progress, showing growth in both revenues and profitability over the previous year, and coupled with this we expect to be debt free by the year end."Shares had declined 17.22% to 14.28p by 12:08.NR