- Second-half weighting spooks investors
- Management confident in meeting full-year expectations
- Supply chains expected to normalise
International healthcare group Alliance Pharma (APH:AIM) spooked investors after warning of disruption that will skew revenues and profits towards the second half this year.
The company told investors that lockdowns in Shanghai and disruption to the supply chain had affected business as normal in the first-half to 30 June.
A second half weighted alert is often the precursor to a cut to full year expectations. While that may not be the case here, investors have been left less confident, sending the share price down 12% in stock market trading on 20 July.
That left the stock trading at 100p, lows not seen since March.
The company also expects lower gross margins than the prior year in the first-half due to sales mix and cost inflation in warehousing and distribution, adding to the disappointment.
MEETING EXPECTATIONS
Despite the disappointing start to the year, the company said in-market demand for its brands remained ‘strong’ and the board expects full-year performance to be in line with market expectations.
The company anticipates an improvement in the product mix in the second half and lower freight costs as supply chains normalize, driving an increase in gross margin.
Analysts expect full-year revenues to grow 17% to £191 million, while net profit is expected to reach £35.2 million from £7.3 million last year.
Given that first-half revenues were relatively flat at £81.6 million, the company has a lot to prove in the second half, which is why the shares were weak.
Chief executive Peter Butterfield commented: ‘I am pleased with the performance of the group in the first half of 2022 against the backdrop of difficult global trading conditions.
‘June was a record trading month for Alliance and we expect this positive momentum to continue, delivering strong sales growth versus prior year across our key brands in H2 as we execute the revenue trajectory expected by us and our distribution partners, in addition to booking the Nizoral orders delayed from H1.’
