Collagen Solutions losses widen as major customer halts order
StockMarketWire.com - Biomaterials and regenerative medicines group Collagen Solutions reported Tuesday a wider annual pre-tax loss as total revenue declined 11.2% undershooting market expectations. The company also warned of a 'transitional year,' for revenue generation.
For the year ended 31 March 2018, pre-tax losses widened to £2.62m from £1.61m as revenue declined 11.2% to £3.50m, and adjusted earnings loss (LBITDA) was £1.58m, compared with a £1.26m loss the previous year.
As was previously announced, the revenue performance both in comparison with prior year and original market expectations was lower than anticipated.
Revenue was largely weighed down by a temporary withdrawal of one customer's tissue product, indefinite suspension of two customer projects, and one significant customer that had adjusted inventory levels.
These headwinds contributed to over £0.8m of year-over-year declines in revenue, and offset both a triple-digit increase in development revenue and gains from new customer manufacturing contracts.
'A significant element of our anticipated revenue growth was going to come through the supply of pericardium tissue to a major customer and having geared up significantly to be able to meet predicted demand, our customer halted their own development programme in November resulting in the cancellation of anticipated orders,' the company said.
The company said, however, that 'at least half of these declines could be reversed as they are not related to permanent customer losses but rather delays in projects or adjustment of inventory levels.'
Collagen Solutions added that its main customer in Korea is not expected to order until next near year, pressuring performance in the current year.
'We anticipate that we will have a significant year of growth and change, and it will be a transitional year in terms of new product development and revenue generation,' Collagen Solutions said.
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