Advanced Medical Solutions shy of expectations

Wound care product manufacturer Advanced Medical Solutions has reported a rise in sales during the twelves months ended December 31st, but the figures seemed to have failed to live up to market expectations.

Profit before tax grew from £4.3m in 2010 to £4.6m in 2011, on revenues of £34.35m (2010: £31.88m). Basic earnings per share rose fell 3.17p to 3.10p, while operating margin was up 190 basis points to 18.6% from 16.7%.

Foam revenues soared 49% as a result of successful new product developments and including a customer product launch, while silver alginate revenues gained 5% - although they fell 2% including de-stocking by a major partner.

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Sales of the firm's LiquiBand product generated strong revenues in Europe and the UK, up 13%, after the group was able to maintain its market positions in these regions.

Chairman Don Evans said: "2011 was another year of strong revenue and profit growth for AMS. There were outstanding performances from both ActivHeal and foam, and we are delighted with the progress we have made with LiquiBand in the US after only two years. The group has, of course, been transformed by the recent acquisition of RESORBA which we expect to add significant value, not just financially but also strategically. Prospects for 2012 look good and we look forward to the future with considerable optimism."

Cash levels rose from £4.1m to £7.1m. The firm proposed a final dividend payment of 0.305p, bringing the total for the year to 0.45p, an 18% increase on the previous year.

Peel Hunt reiterated its hold rating on the stock today, saying second half sales were "somewhat weaker than had been expected although margin initiatives are delivering", while Investec downgraded that stock from buy to hold and slashed the target price by 3p to 97p.

The share price fell 5.49% to 86.00p.

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