COPENHAGEN (Reuters) - Shares in Danish medical device maker Ambu plunged 18% in early trade on Tuesday after its new chief executive announced cuts to the company’s growth prospects for this year and next.
The reduction in targets is Chief Executive Officer Juan-José Gonzalez’s first big announcement after the former Johnson & Johnson executive took over from Lars Marcher last month.
During more than a decade at the helm, Marcher presided over a roughly 5,000 percent rise in the company’s shares as he led the company’s successful expansion of diagnostic and life-support devices for hospitals, focusing on products such as single-use endoscopes.
Ambu’s shares have fallen more than 40% since Marcher’s unexpected exit when the company said it wanted a CEO with a strong international profile as it sought to expand globally.
On Tuesday, Ambu said that its lower growth outlook for the current fiscal year was partly due to discontinuation of one of its colonoscopes, called SC210, after it disappointed in tests in a U.S. hospital.
For the 2018/2019 financial year ending in September, it said it now expects organic revenue growth of 14-15% down from a previous guidance of 15-16% and an EBIT-margin before special items of around 22% compared to a previously stated 22-24%.
It also said it would invest 225 million Danish crowns (£27 million) in sales and marketing and more than double its global sales force and launch a number of new products.
“We will fulfil our aspiration to become one of the major European medical devices companies,” Gonzalez, an American, said.
In the 2019-2020 financial year Ambu now sees organic revenue growth of 16-19%, down from a previously forecasted 18-23%, and an EBIT margin of at least 20% compared to a previous estimate of 26-28%.
Free cash flows in 2019-2020 are now estimated to be around 9% of revenue compared to previously 18% of revenue.
Reporting by Stine Jacobsen; Editing by Susan Fenton