February 15, 2018 / 8:20 AM / 6 months ago

UPDATE 1-Britain's ConvaTec 2017 profit falls on supply delays

(Adds details on division performance, context)

Feb 15 (Reuters) - British medical devices maker ConvaTec said its profit fell 3.3 percent in 2017, bogged down by supply issues at its top two divisions and lower sales from new products.

ConvaTec, which makes catheters and colostomy bags, said on Thursday adjusted operating profit fell to $456.8 million from $472.2 million a year earlier.

However, organic revenue rose 2.3 percent to $1.76 billion, slightly above its lowered guidance of 1-2 percent growth.

Logistics delays, including hurricanes disrupting shipping lanes in the Caribbean, hurt order fulfilments at ConvaTec’s biggest business.

Supply issues forced the FTSE-100 Welsh firm to lower its 2017 revenue growth forecast in October, to 1-2 percent from over 4 percent.

Analysts on average expected revenue of $1.74 billion and an operating profit of $347.1 million, according to Thomson Reuters I/B/E/S.

Organic revenue at the company’s biggest division - Advanced Wound Care - rose 2.6 percent to $577.8 million.

Revenue at ConvaTec’s Ostomy Care business, which contributed 30 percent of revenue in 2017, rose marginally after also being hit by supply constraints, that led to a build-up of backorders and some loss of orders.

ConvaTec said supply issues in its top two divisions had been resolved, but expected the impact from backorders and lost orders at its Ostomy Care to persist in the first half of 2018.

The company’s closest peer Coloplast A/S posted weaker-than-expected quarterly revenue for the fourth time in a row.

Although ConvaTec’s “margin-improvement plan” delivered a 40-basis-point benefit in the first half, 2017 adjusted gross margin rose only marginally to 61 percent after “headwinds and other cost increases” resulted in a negative impact of 70 basis points. (Reporting by Justin George Varghese in Bengaluru; Editing by Sunil Nair and Gopakumar Warrier)

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