Scapa H1 revenue up to £160m despite contract loss

Greater Manchester-based healthcare and industrial adhesives firm Scapa Group said on Tuesday its first-half revenue grew 14.3% to £160.8 million despite the loss of a contract with medical devices maker ConvaTec.

However, Scapa reported a £1 million loss on ordinary activities before tax in the six months to September 30, compared to a profit of £9.7 million for the same period last year. 

On June 3, shares of Scapa Group fell almost 50% after it said a contract worth $30 million a year had been terminated by ConvaTec Inc.

Scapa said on Tuesday: “Scapa was successful in its motion to dismiss ConvaTec’s claim filed in May 2019, in New Jersey Federal Court.

“Scapa’s claim against ConvaTec in Connecticut for damages in excess of US$83m has been filed.”

Trading profit fell 17% to £14.2 million reflecting the impact of the loss of the ConvaTec contract.

In its outlook, Scapa said: “Scapa has again delivered a solid first half performance with growth in revenue, despite the significant impact of the loss of the ConvaTec contract, resulting in reduced trading profit and margins. 

“There are further significant opportunities for both business units to improve sales and margin performance through rigorous execution of the strategy, in the short and longer term.

“The board remains confident of delivering its full year expectations and in the company’s ability to drive shareholder value.”

Scapa Group CEO Heejae Chae said: “We are pleased to report a resilient financial result in the first half of the year, despite the significant impact of the loss of the ConvaTec contract.

“We have delivered strong revenue growth and made good progress on our operational footprint plans for integrating and streamlining the business.

“We anticipate that the second half of the year will benefit from new products and technology transfers from new and existing customers.

“In the medium-term, we expect our operating leverage to unwind as we realise the value from our strongest-ever pipeline.

“Whilst the macro environment remains challenging in some of the markets in which we operate, the Board remains confident of achieving its full year expectations.”