Trinity Biotech blames increased staff costs for 50% cut in profits

Increased staff costs cut first-half profits at Irish diagnostics specialist Trinity Biotech by 50 per cent to $2 million (€1.66 million), the company said yesterday.

Results for the six months to the end of June show revenues grew 10 per cent to $36.5 million from $33.2 million in the same period last year. Operating profits dropped to $2.2 million from $4.4 million, while profit before tax fell to $2 million from $4 million. Earnings per share (EPS) for the first half fell to 3.5 US cents compared with 8.2 in 2003. EPS for the second quarter, which also ended in June, fell to 2.2 cents from 4.1 cents.

Revenues in the second quarter grew 20 per cent to $20 million in the second quarter of 2003. Profit before tax for the three-month period was $1.2 million, down 40 per cent on 2003 pre-tax earnings of $2 million.

The fall in profitability was largely the result of a jump in sales and administration expenses. Costs under this heading rose 75 per cent to $7 million year-on-year in the second quarter, while they grew by over 50 per cent to $12.7 million in the first half. R&D costs remained steady in the second quarter at $1.2 million, but dipped slightly through the first half to $2.3 million from $2.8 million in 2003.

Trinity said the rise in sales expenses was due to the acquisition of US diagnostics specialists Fitzgerald International Industries and Adaltis, which it bought during the quarter. In a statement yesterday, Trinity Biotech chief executive officer Mr Ronan Ó Caoimh said the company had successfully integrated both businesses, and he was confident they would enhance profitability. Their contribution accounted for roughly half of the group's quarterly revenue growth, said chief financial officer Mr Rory Nealon.

Trinity Biotech is based iDublin and is listed on New York's Nasdaq market.