JOBS are set to go at medical testing company Immunodiagnostics Systems (IDS) as it tries to make savings to compensate for falling sales.
The Boldon life sciences company revealed it was offering voluntary redundancy packages but a spokesman said he was unable to confirm how many jobs faced the axe. The business employs around 300 people, including 110 at its South Tyneside headquarters.
The spokesman said: “This may involve various roles. Clearly, there will be some in the UK.”
IDS is aiming to save £2m a year, around 10% of its annual costs, and expects the restructure to result in a one-off £1.2m cost this year. The company made the announcement yesterday as it issued its second profits warning in recent months. It said that it now predicts sales of £52m-53m for the year to the end of March, with pre-tax profits of around £14.5m-£15.3m.
That compares to its forecast in June last year that 2012 revenues would come in at £58.6m in 2012, rising to £68.3m in 2013 and £75.8m in 2014. IDS also said in the summer that it aimed to increase its North East workforce by around 50 over this period.
The business, which saw last year’s sales rise by 35% to £50.2m with a pre-tax profit jump of 51% to £16.6m, has been beset by an increase in competition for its core vitamin D testing kits especially in the lucrative US market.
IDS said: “The company expects the pressure on these revenues to persist as alternative products, both manual and automated, increase competition and reduce unit pricing. Consequently manual Vitamin D revenue is expected to show continued decline in the medium term.
“The company is responding to the changed market conditions for its manual products and is supporting both its direct sales operations and its distributors with better pricing and stronger marketing tools.”
However, it maintained revenues and placements from its flagship IDS-iSYS automated vitamin testing machines and plans to introduce new IDS-iSYS tests over the next year. Stockbrokers reacted to the news by downgrading their sales expectations – Panmure Gordon by 21% for 2012 and Brewin Dolphin by 16%.
Panmure Gordon said: “To us, manual vitamin D testing had been the bedrock of the business, which is now showing signs of commoditisation. As a silver lining, the automated platform is doing well but growth was not strong enough to compensate for weakness in manual testing revenues.”
Brewin Dolphin said: “While IDS is cash generative, with strong IP and is well positioned for long-term growth, limited near term revenue visibility will inevitably weigh on sentiment.”
And Peel Hunt said the statement showed that the foundations of IDS’s rapid growth were “coming under pressure as a result of rising competition and price decreases”.
