Scapa profits come unstuck as healthcare margins shrink

Scapa Group reported drops in interim profits and revenues on Tuesday as contracting margins in the adhesive products specialist's healthcare division took a toll.

The industrial and medical bonding products manufacturer said profit before tax for the six-month period ended 30 September dropped by 37% to £9.7m as revenue dropped 3.4% to £140.7m.

In the AIM-listed company’s healthcare division, revenue inched up 0.2% but trading margins fell to 14.2% from 16.1%. The industrial division revenue fell 5.7%, but trading margins rose to 13.3% from 11.5%.

Cash and cash equivalents stood at £12.8m at 30 September, down from £23m at the same point last year.

Heejae Chae, chief executive, said: "The first half has delivered a solid trading performance and continued good progress in the transformation of Scapa from an industrial tape company to a group with two businesses that are global and market leaders."

The healthcare division was particularly active during the half-year period, acquiring BioMed and the development and manufacturing assets of Systagenix from Acelity, as well as entering an exclusive five-year development and supply agreement for Systagenix advanced wound care products.

"Whilst the macro environment remains challenging, we anticipate the profit for the year will be in line with expectations, excluding the impact of the Systagenix healthcare transaction. This transformative transaction is expected to be modestly earnings dilutive in the current year and materially accretive from FY20 onwards," said Chae.

Scapa’s shares were down 3.26% at 416.00p at 0839 GMT.