August 24, 2017 / 5:02 AM / a year ago

Belgium's IBA issues profit warning as project delays hit first half results

Aug 24 (Reuters) - Belgian medical equipment company Ion Beam Applications (IBA) cut its guidance for 2018 and 2019 on Thursday, as project delays and increased competition drove the proton therapy machine maker to its third profit warning this year.

IBA has been beset by delays in the construction of buildings by third party contractors to house its proton therapy systems, which are used to treat cancer.

“The first half of 2017 has been slower, in line with the customary lumpiness which characterizes the proton therapy market,” Chief Executive Olivier Legrain said in a statement.

“This combined with the increasing competition in the market is leading to limited visibility on the timing of new orders.”

IBA now targets flat to mid-single digit revenue growth and a mid to high-single digit operating margin for 2018 and 2019.

In May the company said it expected double-digit revenue growth and an operating margin of around 13 percent in 2018.

The company cut its operating margin guidance for 2017 in May and in July, but said at the time of the second revision it was still assessing the impact of delays on 2018 and 2019.

IBA said it has adopted new measures to deal with project delays, including adjustments to construction timelines to reflect timings in recent projects, updated project management information systems and discussions to provide a dedicated construction service to customers.

Operating profit (REBIT) for the first half of 2017 fell by 87.4 percent to 1.9 million euros ($2.25 million) as a result of delays in project execution and increased one-off costs.

Revenue for the first half rose by 4.5 percent to 151.6 million euros.

The company restated its guidance of 5-10 percent revenue growth and a low to mid-single digit operating margin for 2017 and also restated its mid-term target of a 13 to 15 percent operating margin.

The company expects high single-digit to low double-digit revenue growth in the mid term.

It said its policy of maintaining a dividend payout ratio of 30 percent remains unchanged. ($1 = 0.8462 euros) (Reporting by Alan Charlish Editing by Jeremy Gaunt)

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