Comment: Tristel looks to clean up overseas

12th Oct 2009 15:49

Tristel chief executive Paul Swinney described the infection and contamination control company's results as 'good, if not spectacular' but his modesty contrasts with his excitement about the prospect of overseas expansion.In the year to June 30, Tristel, whose products are used to combat infections such as the infamous Clostridium difficile, said revenues climbed to £6.8m from £6m over the same period the previous year, while pre-tax profits rose to £1.3m from £1.2m.Following the period, Tristel concluded a licensing agreement with Clorox, an S&P 500 company that makes bleach and other cleaning products. According to Swinney, Americans use the word Clorox to describe bleach in the same way the word we use 'Hoover' for vacuum cleaners.Export sales currently account for about 7% of Tristel's revenues having risen by 53% to £472,000. The company will be hoping that its new big-name US partner can help lift international revenues.Having a partner in the US is important to Tristel because the company previously abandoned attempts to enter the market when regulatory hurdles proved too burdensome. This agreement is unlikely to result in any revenues in the next two years according to the broker Astaire Securities, but gives Tristel access to a huge market.Astaire also raised the intriguing possibility that, having invested considerable time in in Tristel, Clorox will want to protect its investment. If a bid emerged for Tristel 'there is a real possibility that Clorox would be minded to counter-bid,' Astaire says.Tristel also has China in its sights and has launched a subsidiary there to launch an endoscope decontamination system in the market. The subsidiary is in the process of seeking regulatory approval for Tristel's disinfectant products.It has already signed a distribution agreement to supply Stella units, which are trays used for disinfecting equipment, in the province of Zhejiang with a value of £440,000 over the next three years. China, which is rapidly adopting UK standards in its hospitals, could be an ideal arena for future growth of Tristel's consumable products.Tristel acknowledges that healthcare spending is being squeezed in the UK, but adds that it 'cannot imagine' targets to control hospital infections will be abandoned. Astaire forecasts a pre-tax profit of £2m for next year, which is a sharp rise from this year's earnings and makes for a price/earnings ratio of 10.5, although this doesn't include potential earnings from the Clorox contract and the Chinese subsidiary. Having established a solid base in the UK, Tristel will now be pinning its hopes on more exciting times overseas.