Trinity shares drop 10% as Q1 profits fall

TRINITY BIOTECH shares slumped 10% yesterday after the Wicklow-based developer of clinical tests saw first-quarter pre-tax profits fall to $748,000 (€634,000), 60% less than the same period last year.

Sales were broadly unchanged from the first three months of 2003 at $16.4 million and 6% ahead of sales in the previous quarter. But the bottom line suffered from increased selling and administrative costs, which jumped by $1.7m to $5.7m.

Chief financial officer Rory Nealon said the fall in pre-tax profits had been expected and was explained by the decision to take on 40 new sales staff in America.

The new sales force would cost $1.2m per quarter and would handle the launch of the group’s test for the HIV virus, which was granted approval by the American authorities in December.

Mr Nealon also said the increased sales team, which had grown to 70 after the recent recruitment programme, would win back distribution business that had been lost to a competitor.

The quarter also saw Trinity spend $20m on two acquisitions, which are expected to give the group access to new areas of the life sciences market and complete its product range in the market for infectious diseases.

Chief executive Ronan O’Caoimh said the acquisition of Fitzgerald Industries, which cost over $16m, would provide operating synergies and significant growth in the future. Fitzgerald had shown impressive profit growth in recent years, said Mr O’Caoimh.

Trinity continued to spend heavily on research and development activity, raising its quarterly spend from $900,000 to $1.2m, or 7.2% of revenues. The company develops and manufactures over 500 diagnostic products that are used in patient care and clinical laboratory tests.

It was set up in 1992 and is quoted on the Irish Stock Exchange and New York’s Nasdaq. It has manufacturing facilities in Bray as well as the American states of New York and California.