Subdued trading conditions in the UK have held back "pleasing overseas progress" for medical equipment firm Huntleigh Technology, parent of Black Country bed manufacturer Huntleigh Nesbit Evans.
The group yesterday posted a seven per cent fall in annual profits after sales were hit by the cash crunch in the NHS.
Pretax profits before restructuring costs of £3.3 million for the year to December 31 fell from £27.4 million to £25.5 million.
Turnover rose one per cent to £199.8 million, while earnings per share before restruc-turing costs fell 21.3p to 20.3p. The dividend payment risesn from 7p to 7.4p.
The results were largely as expected - analyst Brett Pollard at Numis was forecasting pretax profits of £26 million and EPS of 20.5p, while the company's broker Investec had penciled in pretax profits of £25.3 million and EPS of 19.6p.
Huntleigh had been warning throughout the year that progress in the UK was being hampered by financing problems in the NHS, from which it derives almost 40 per cent of revenues.
It has been cutting costs and a restructuring resulted in the eradication of 140 jobs and £3.3 million of exceptional costs last year.
However, Huntleigh's overseas business has continued to grow, and the group is trying to reduce its dependence on the UK market by expanding overseas.
It won a £4 million order from the South African government to supply 7,900 of its Anniversary hospital beds earlier this year.
Chairman Julian Schild told shareholders: "Huntleigh made very pleasing progress in its overseas markets with revenue growing by 13.8 per cent on 2004, but overall revenue growth, as previously reported, was held back by very difficult trading conditions in the UK.
"However, Huntleigh has continued to show strength in this market and remains well placed to benefit from any uplift as it occurs."
He added: "The market conditions in the UK reinforce the prudence of reducing our reliance on Huntleigh's home market and approaching a longer term revenue mix objective of one-third UK, one-third United States and one-third rest of world."
Turning to the outlook, he said: "Although the UK business was depressed in 2005 by the capital funding challenges faced by the NHS, Huntleigh has continued to show strength in this market and remains well placed to benefit from any uplift as it occurs.
"The shortfall was predominantly in capital sales of replacement products such as hospital beds and specialist mattresses into mature markets. Such expenditure cannot be delayed indefinitely."