ALVA-based Omega Diagnostics is banking on the success of a proposed HIV monitoring kit and new allergy tests to boost future earnings after recording flat sales and a 22% drop in profit for its last financial year.
Omega was assailed by wet weather hitting demand for its allergy kits in key markets such as Germany, while cuts in health spending have also weighed on the company. Underlying pre-tax profit fell 22% to £780,000 for the year to March 31, on turnover that was up 1% at £11.3 million.
Unadjusted earnings were down 42% at £276,000.
Using a technique pioneered by Australian scientists, Omega staff are seeking to develop the Visitect CD4, which tests the white blood cell count of HIV patients with a view to selling kits to aid agencies.
The company has also finalised a long-awaited protocol for the allergy tests it has developed for the IDS-iSYS system used in many laboratories.
Chief executive Andrew Shepherd said of the CD4 test: "It is taking longer than we originally expected."
But he said great progress had been made in the past couple of weeks.
Work on the technology is expected to be completed by the end of September, when the company will conduct field tests.
The first sales are expected to trickle in during the current financial year .
"The large revenue impact is in the year to March 2015," Mr Shepherd said.
Omega told investors it plans to invest £1.5m in inventory for the tests.
The company last month raised £4m from shareholders to finance its expansion.
The developments comes after a tough year when revenue in Omega's allergy and autoimmune business fell 7% to £4.2m as wet weather hit demand for hay fever tests. Infectious disease testing income fell 1% to £2.7m.
But food intolerance revenue was up 13% at £4.4m.
Chairman David Evans said: "More than half of group turnover is generated in the UK and Europe, predominantly through the food intolerance and allergy and autoimmune divisions.
"The economic uncertainty in this region has led to a slowdown in growth in European in vitro diagnostics markets and the ability to grow our own business is not immune from the broader landscape.
"To counter risk in these areas, we have a strategy to focus on the emerging BRIC (Brazil, China, India, Russia) markets."
House broker finnCap tips Omega to have just muted profit growth in the current financial year but expects profits to balloon to £3.9m in the 2015 financial year.
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