Tristel shares down despite strong performance

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Tristel shares down despite strong performance
Master Investor Magazine

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AIM-listed infection and contamination prevention specialist Tristel (LON:TSTL) increased revenues for the six months ended 31st December by 12% and gross margins improved by 300 basis points to 78%. However, the company continues to face issues in accessing US markets due to the length and complexity of the FDA approval programme for novel products such as Tristel’s chlorine dioxide chemistry. As of today, the company is continuing to pursue approval but has no timetable for it being received and no material contribution from the US has been included in current budgets for this year or the next.

CEO Paul Swinney commented: “We are very pleased with our progress in the first half. Sales growth has been in the middle of our target range.

Sales benefitted from just over one month’s contribution of £0.4m from the Ecomed Group, whose audited and adjusted EBITDA for the calendar year 2018 of €1.17m compares to a threshold target of €0.84m, meaning that the conditions of the acquisition earn-out have already been met. We expect a solid contribution from Ecomed Group in the second half and for the acquisition to be materially earnings enhancing in the years ahead.

Sales growth in the UK human health division, which accounts for 84% of all UK sales, was up by 8% half-on-half. This is encouraging given that UK sales growth has been relatively flat for the past few years. Moreover, overseas sales continued to grow at a very healthy rate of 19%.

We continue to advance our USA regulatory project although the exact timing of further approvals remains hard to predict. This project commenced in 2015 and the cumulative investment made to end December 2018 has been £1.3m, with costs of £0.1m incurred in the first half“.

Tristel’s share price dropped by 4.13% to 290p (as of 13:00 GMT).

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