Invacare’s Q3 results reveal European mobility & seating recovery but sales down $23.9m YoY
Invacare has reported an 8 per cent global increase in Q3 2020 net sales compared to Q2, however, revealed sales still trail the same period in 2019 by almost $24m (£18m).
It follows the multinational mobility and healthcare manufacturer’s Q2 results revealing a significant drop in sales, particularly in its mobility and seating product in Europe. In the second quarter, Invacare saw the segment drop by 24 per cent year on year as a result of lockdown restrictions imposed by various governments across the continent.
According to Invacare’s Q3 results, global net sales increased sequentially from Q2 2020 by 8 per cent, fuelled primarily by European mobility and seating product sales, which grew by a substantial 38.4 per cent.
Despite the recovery of the mobility and seating category, Invacare’s reported net sales for Q3 were still down by $23.9m (£18.2m) against the same period in 2019, falling from $235.8m (£179.6m) to $211.9m (£161.4m).
A supplier of a wide range of healthcare products, Invacare’s quarterly report noted that while its respiratory products had enjoyed growth in sales, it was more than offset by lower sales in mobility and seating and lifestyle products.
The report also highlighted that gross profit as a per cent of net sales decreased from 28.7 per cent in Q3 2019 to 28.3 per cent in Q3 2020, attributed to unfavourable manufacturing variances associated with reduced net sales, primarily in Europe.
In spite of the fall in gross profit margin and net sales, the company reported an improvement in operating profit of 21.2 per cent, increasing from $2.4m (£1.8m) last year to $2.9m (£2.2m) in Q3 2020. This was driven by a reduction in SG&A expenses, which reduced from $63.5m (£48.3m) in Q3 2019 to $55.5m (£42.3m) this year.
The $8.0m (£6.1m) saving was attributed to a reduction in employment costs, as well as lower commercial expenses.
Discussing the results, Matt Monaghan, Chairman, President and CEO of Invacare, commented: “I am pleased with our 3Q20 performance which reflects sequential improvement in net sales and a nearly 49 per cent sequential increase in profitability, despite the continuing pandemic.
“We successfully achieved our 12th consecutive quarter of higher year-over-year quarterly Adjusted EBITDA growth by taking actions to leverage SG&A expenses, mitigate supply chain constraints, and introduce new products which are expected to drive incremental sales growth. In addition, our transformation initiatives have driven sustainable improved results in line with our expectations, and we remain poised to continue delivering stronger results even as we navigate the challenging environment.”
Monaghan added that European sales were particularly promising, with a double-digit improvement in sequential net sales as public health restrictions began to ease over the period.
Even with the recovery in Europe against the previous quarter, year on year sales were still significantly behind 2019, down by 15.3 per cent to $116.3m (£88.6m).
According to Invacare, public health restrictions in certain countries continued to limit access to healthcare professionals and institutions needed for certain product selections. These measures lowered sales for mobility and seating products most significantly, and, to a lesser extent, non-bed lifestyle products, explained the company.
“Looking ahead, we are seeing positive momentum in sales in our key countries of France and Germany, with the UK remaining relatively closed,” continued Monaghan.
“As markets continue to re-open, we anticipate this will have a positive impact on net sales, however, pandemic-related closures are unpredictable and may occur intermittently over the winter months, but are not expected to be as severe as those enacted in 2Q20.”
Invacare’s CEO also stated the company “remained resilient” in North America, with both YoY and sequential improvement in net sales, despite the pandemic.
“For respiratory products, demand remained elevated as the pandemic persisted, and we expect this trend to continue but return to a more normalized level of sales,” he added.
“Due to the longer quote-to-order cycle, primarily in the United States, sales of mobility and seating products were impacted as public health restrictions in 2Q20 limited end-user assessments and dampened quotes. However, as restrictions eased, we experienced significantly higher quotes in 3Q20, which we expect will be converted into stronger sales in 4Q20.”
Monaghan concluded by confirming that the global manufacturer is still on track to consolidate its production in Germany and modernise its global IT systems.
“Assuming that markets begin to normalise in 2021, we expect these efficiencies and the increased acceptance of new products will drive incremental sales growth beyond pre-pandemic levels, accelerating our already improving operating results,” he finished.https://thiis.co.uk/invacares-q3-results-reveal-european-mobility-seating-recovery-but-sales-down-23-9m-yoy/https://i1.wp.com/thiis.co.uk/wp-content/uploads/2020/02/Invacare-UK-powerchair.jpg?fit=900%2C506&ssl=1https://i1.wp.com/thiis.co.uk/wp-content/uploads/2020/02/Invacare-UK-powerchair.jpg?resize=150%2C150&ssl=1NewsroomSupplier NewsTrade NewsEurope,healthcare,Invacare,Matt Monaghan,Mobility and Seating,net sales,pandemic,Q2,Q3,respiratory products,SG&A savingsInvacare has reported an 8 per cent global increase in Q3 2020 net sales compared to Q2, however, revealed sales still trail the same period in 2019 by almost $24m (£18m). It follows the multinational mobility and healthcare manufacturer’s Q2 results revealing a significant drop in sales, particularly in its...Calvin BarnettCalvin Barnettcalvin@thiis.co.ukAdministratorTHIIS Magazine