Weak China sentiment continues to hit Biosensors
Singapore
MEDICAL devices company Biosensors International continued to struggle with weak market sentiment in China as it reported a net profit of US$4.9 million for the three months ended Sept 30, 2014, 56 per cent lower than the US$11.3 million a year ago.
Overall revenue fell 10 per cent from US$83 million to US$74.8 million, but cost of sales increased by 9 per cent to US$20.9 million.
The company suffered from softness in its overall business that was "more severe than originally expected," new CEO Jose "Pepe" Calle Gordo told analysts via a conference call on Wednesday evening.
"While we continue to think Biosensors has many strengths, we do acknowledge we need to improve our performance, focus on improving operational efficiency, and enhance the effectiveness of our execution."
He highlighted how general and administrative fees for the quarter had come down by about US$3 million to US$9.5 million compared with a year ago. This "reflects improvements to our overall cost structure", he said.
Mr Calle, previously vice-president of medical device firm Abbott Vascular, took over in September. He said that one main reason for the company's underperformance is its China business. This comes despite "single-digit growth" for units and revenue outside China, such as a 70-per-cent revenue growth in Japan.
Prices are coming down for heart stents, as market sentiment remains weak partly due to the anti-corruption campaign by the Chinese government, he said.
"An area that requires attention is topline growth in China. We appointed a veteran from the medical industry a few months back, he's right now working out specific strategies to drive growth," Mr Calle said.
Asked by analysts if the company is losing market share in China, or key sales accounts, he replied that its market share is unchanged, while the overall number of stent implants might have come down.
A bright spot was its recently added cardiac diagnostic segment, which supplies medical imaging tools. Revenue rose about 60 per cent to US$3.9 million (US$2.4 million a year ago).
But its licensing and royalties revenue plunged 45 per cent to US$5.9 million from US$10.8 million a year ago. This was due to lower sales of Nobori stents by Terumo Corporation, which helps Biosensors distribute them in Japan. However, its own distribution business for Terumo is growing, Biosensors said.
The counter closed up a cent at S$0.635 before results were out.
