The Medical equipment group Medisys ousted its chief executive yesterday and warned that tough competition in glucose monitoring would hit its annual profits, sending its shares down 35 per cent.
The company, which specialises in blood monitors for diabetics, said it decided on Thursday that the chief executive, David Conn, should step down. It expects to appoint a replacement in a few months. Mr Conn will continue to work for the group's glucose-monitoring unit.
Medisys warned in December that it was encountering growing competition in the long-term care segment of its glucose-monitoring business. Since then, competition had intensified, it said yesterday, forcing the company to pursue a more aggressive pricing and promotional strategy with some customers to protect its market share.
It said: "The company anticipates that this more competitive environment will continue to impact sales for at least the remainder of the financial year (to 30 September)."
Medisys was hit by increased competition from its rivals, such as Abbott and Johnson & Johnson, for its blood-glucose monitoring product, which sells mainly in US nursing homes for diabetics.
The companyexpects sales in the six months to the end of March to be about 5 per cent lower than in the year-earlier period - "materially less than market expectations" - which will "significantly reduce the company's profitability."
Analysts said they would slash their forecasts. Sebastien Jantet, at Investec Securities, said: "It's a very disappointing trading statement. They'll miss the forecast for the first half and for the full year. There will be substantial downgrades."
Faced with lower sales, Medisys said it would look for new ways to cut costs and opted to close its London office to achieve annualised savings of £400,000. It is transferring its London operations to Minneapolis in the US and Woodbridge in the UK. Michael Barry, the company's finance chief, said the London closure would result in a "handful of people" being laid off.
Medisys also announced that it would write off £6.8m of assets relating to Futura Safety Syringe after an auction failed to generate successful bids for the unit. Its shares ended down 2.02p at 3.72p.
On a brighter note, the company hopes to expand its presence in the retail segment by providing a private branded blood glucose monitoring product to the Target Stores retail chain in the US. Target plans to launch the product this year.